Barnes & Noble Posts Lower Profit, Warning for '05

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Barnes & Noble Inc. (BKS), the top U.S. bookseller, Thursday said quarterly profit fell 11 percent and warned 2005 earnings will miss Wall Street forecasts due to spending on a new distribution center, sending its stock down as much as 7 percent.

Including the effect of GameStop (search), the video game retailer that Barnes & Noble spun off Nov. 12, net income fell to $115.6 million, or $1.56 a share, from $130.2 million, or $1.65 a share, a year earlier.

Excluding GameStop, profit rose to $112.3 million, or $1.52 per share, from $104.8 million, or $1.35 a share. Analysts expected a profit of $1.54 a share, according to Reuters Estimates. The retailer's internal estimate for the first quarter was $1.51 to $1.56 a share.

Bookstore sales rose 5 percent to $1.52 billion.

For the first quarter, Barnes & Noble forecast earnings of 11 cents to 13 cents a share, with sales rising in the low-single-digit percentages at its namesake stores open at least a year.

For the year, it forecast earnings of $1.94 to $1.98 a share, including expenses associated with its new distribution center. Analysts polled by Reuters Estimates expected $2.08 per share.

"The full-year outlook is weaker than what had been expected, which is contributing to the weakness in the stock," said Donald Trott, an analyst at Jefferies & Co. Inc.

Excluding about 8 cents a share in costs from the distribution center, the company said its 2005 outlook implied earnings growth of 13 percent to 15 percent.

Same-store sales are expected to rise 3 percent in 2005 at Barnes & Noble stores, a company statement said.

Like many retailers, Barnes & Noble has reviewed the way it accounts for leases and restated fiscal-year 2004 earnings lower by 1 cent a share. The change is not expected to be material to 2005 earnings, the company said.

The stock fell 4.3 percent, or $1.50, to $33.04 on the New York Stock Exchange (search). Earlier in the session it fell as low as $32.20.