The nation's leading "bricks and mortar" (remember that one?) bookseller, Barnes & Noble
Sales jumped 10% to $1.28 billion while gross margins held steady at 26%. For comparison, Amazon.com
Both companies got a boost from the Hillary Clinton and new Harry Potter books, which flew off the shelves like magic. The unlikely pair helped lift Barnes & Noble's same-store sales 5.6%.
In the words of CEO Steve Riggio, "Sales were strong throughout the entire second quarter.... We are pleased to see that hardcover sales are buoyant again." Citing a strong fall lineup, the company also raised guidance for the second half of 2003.
In quarter three, Barnes & Noble expects $0.01 to $0.07 in consolidated earnings per share, and $1.89 to $1.97 for the full year. At $26, the stock trades at about 13.5 times that forward estimate and is cheaper on a free cash flow basis, as measured for the year ended February. Its multiple of 11 times that year's free cash flow is less than half the S&P 500 average of 23 times. (Free cash flow turned negative in the first quarter 2003 -- it's seasonal.)
Upped guidance notwithstanding, Barnes & Noble is battling a lackluster economy, and same-store sales for the year are expected to tick up just 1% to 2%. The company, which operates 634 Barnes & Noble locations, also handles 237 B. Dalton Booksellers (which have seen weak results), Barnes&Noble.com
City Lights it ain't.