Yesterday Barnes & Noble and Borders both reported sales drops in their most recent quarters and cautioned that the holiday season again will be difficult. Wall Street wasn't happy: while the Dow Jones fell 0.16%, B&N closed at $22.25 a share, down 5.4% on twice the usual volume, while Borders closed at $1.74, down 13.4%, on three times the usual volume.
But Frank Badillo of the consulting firm Retail Forward expressed some optimism about book retailing, telling the Wall Street Journal, "We expect [booksellers] to have a modest bounceback because they're selling smaller-ticket items, a category we think will open up a little for the holidays." Also, he said that, as the Journal put it, "a deep array of titles from well-known authors should also spur sales."
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At Barnes & Noble in the second quarter ended October 31, total sales fell 4%, to $1.2 billion, and the net loss was $24 million, compared to a net loss of $18.4 million in the same period a year ago. Sales at stores open at least a year fell 3.2%. Sales at Barnes&Noble.com rose 9%, to $120 million.
At B&N College, sales between September 30, when B&N acquired B&N College, and the end of the quarter were $65 million. During that period, sales at college stores open at least a year fell 0.2%.
The company said that bestsellers during the quarter included Dan Brown's The Lost Symbol, Jeff Kinney's Dog Days (Diary of a Wimpy Kid Series #4), Mitch Albom's Have a Little Faith, Vince Flynn's Pursuit of Honor, Malcolm Gladwell's What the Dog Saw and Edward Kennedy's True Compass.
Saying that it expects "general retail traffic will remain challenged during the holiday selling season," B&N predicted that sales at stores open at least a year in the third quarter, which ends January 30, will fall in a range of 1%-3%. For college stores, comp-store sales are expected to be between flat and up 2%.
B&N also reduced estimated earnings for the year because of higher production costs for the Nook e-reader as well as high investments in its digital strategy, which includes adding people, technology and in-store marketing support.
Incidentally, during a conference call, B&N CEO Steve Riggio called the price wars that started between Amazon.com and Wal-Mart "overblown," according to the AP. "Bookselling has been for a long time a 'long tail' business," Riggio said. "Bestsellers represent less than 5% of our sales and among these very top best sellers less than 1% of our sales."
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At Borders Group in the third quarter ended October 31, sales fell 12.7%, to $595.7 million, and the net loss was $38.5 million compared to a net loss of $172.2 million.
Sales at stores open at least a year fell 12.1% at Borders superstores and 7.2% at Waldenbooks Specialty Retail stores. After closing 106 Walden division stores in the past year, leaving 361, the company will close another 200 Waldens, leaving about 160.
"During the third quarter, we prepared for the upcoming holiday selling season," Borders Group CEO Ron Marshall commented. "We increased core book inventories, experimented with a range of traffic-driving and in-store promotions and invested in store payroll to get books out on the shelves and our stores in top condition to receive customers." The company is instituting an in-stock guarantee: store customers who want a book not available at the store will be sent the title with no shipping charges.