Books-A-Million (NASDAQ:BAMM) isn't the only bookseller to ride Harry Potter's levitation spell toward higher earnings. Borders (NYSE:BGP), Barnes & Noble (NYSE:BKS), and Amazon.com (NASDAQ:AMZN) accounted for roughly half of the initial copies of Harry Potter and the Deathly Hallows sold in the United States. However, a little catalyst can mean big things for a small chain like Books-A-Million.
The book-selling superstore posted a nearly 10% spike in net sales, to $132.8 million, fueled by a 6.6% gain in same-store sales. Obviously, Scholastic's (NASDAQ:SCHL) final installment in the Potter series was a major contributor. Profit soared 24% to $0.19 a share.
Sure, larger rival Barnes & Noble threw midnight costume parties, while Amazon's virtual halls were alive with Potter-themed contests. In contrast, Books-A-Million's midnight releases throughout the 206-unit chain were a mostly an in-and-out affair. The company successfully presold Express Lane vouchers that customers could quickly exchange for copies of the book.
I thought the Express Lane concept would be a bad idea. What happens if you walk into Books-A-Million, hand over your prepaid voucher, get the book, then see that Hermione Granger bookmark or Dumbledore chess set that you wanted? You'd look at the long line at the register, realize that you have the book, and move on. Express Lane helped get customers in and out quickly, but I figured it'd also eat into their potential to generate incremental sales during that particular visit.
I was wrong, though I guess it would have been pretty hard for any major bookseller to blow this particular quarter.
So where do we go from here? Rowling's done. Shaky rumors suggest she might be writing a detective novel next. The "next big thing" is bound to come around, but it will take a while before it builds up to the kind of frenzied crescendo that last month's Potter release orchestrated.
In that sense, it's good to see that Books-A-Million has been performing well lately, long before we all found out what happened in Potter's final year at Hogwarts. As Rich Smith pointed out last week, margins have been improving sequentially. Yesterday's healthy showing marks the fifth straight quarter that operating and net margins have improved over the previous period.
Those streaks may very well end in the current quarter, but with the stock trading well below last December's highs -- even adjusted for a special $3-per-share dividend earlier this year -- one can argue that Books-A-Million is due to use that levitation spell.
Amazon.com has been recommended by David Gardner for his Stock Advisor subscribers. Borders is a pick in the Inside Value newsletter. Pick up some good summer reading by rolling with 30-day trial subscription offers to both research services.
Longtime Fool contributor Rick Munarriz doesn't read as much as he'd like to. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
