NEW YORK – Hard-hit bookselling giant Barnes & Noble Inc. on Thursday warned of an earnings shortfall for 2001 as customer traffic to malls and bookstores slowed after the Sept. 11 attacks.
The news drove Barnes & Noble shares down by double digits on the New York Stock Exchange.
The retailer said an example of the post-Sept. 11 effect was that on Halloween day, which is normally one of the strongest days of the third quarter, sales for the company's bookstores fell between 2 percent and 20 percent, owing to renewed warnings about more attacks on the United States.
An e-mail, later declared by security authorities to be a hoax, had circulated for weeks ahead of Halloween, warning shoppers to stay away from the malls in the United States.
The New York-based retailer also cut its fourth-quarter earnings outlook for its retail bookstore business. It said it now expects to post consolidated 2001 earnings per share between $1.08 to $1.12 a share.
That is far short of analyst estimates who put the earnings per share at $1.60 for the year. Their estimates ranged from $1.50 to $1.70, versus a profit of $1.06 that Barnes & Noble reported a year ago.
Barnes & Noble company said the retail bookstore division was likely to report fourth-quarter earnings ranging from $1.04 to $1.08 a share.
Chairman and chief executive officer Leonard Riggio said Barnes & Noble was performing better than most retailers, although the fallout from Sept. 11 is affecting sales.
"Given the conditions of the economy, we are encouraged by our ability to outperform the retail sector," Riggio said. "We expect to continue to benefit from the counter-cyclical nature of the book business, yet recognize that even our business will be somewhat affected,'' he said.
Barnes & Noble operates 569 Barnes & Noble and 331 B. Dalton bookstores. Its GameStop, formerly Babbage's, is the nation's largest operator of video game and entertainment software stores with 990 outlets.
Lack of Media Exposure for Authors
Riggio said the projected earnings shortfall would be exacerbated by the nation's preoccupation with the war in Afghanistan.
"Problematic is the lack of media exposure for authors amid the din of crisis coverage,'' he said in a statement.
Barnes & Noble said sales at its superstores open at least a year fell 0.4 percent in October from a year ago. It said it expects same-store sales for the fourth-quarter to be flat to up 2 percent.
The company said although comparable sales for Barnes & Noble stores were in the low range of previously revised guidance, new stores and non-comparable stores opened last year were well below plan.
Comparable-store sales at B. Dalton, which comprises 8.0 percent of total bookstore sales, decreased 5.1 percent for the quarter. This was below plan, as were the Barnes & Noble mall stores.
Video game comparable-store sales for October were on target, decreasing as expected by 19.7 percent from the prior year when Sony Corp PlayStation 2 gaming console was launched, the retailer added. It said game comparable-store sales for the quarter were also on target, increasing 3.6 percent.
Reuters and the Associated Press contributed to this report.