Barnes & Noble Posts Wider Loss

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Top U.S. bookseller Barnes & Noble Inc. on Thursday posted a wider third-quarter loss from a year ago, but its shares rose sharply amid investor optimism that a modest sales rebound in November may help lift the retailer's current-quarter profits.

Shares of the New York-based Barnes & Noble rose 10.7 percent or $2.89 to close at $29.90 on the New York Stock Exchange. The shares earlier traded as high as $30.25.

The stock rise marked a significant recovery after it fell almost 36 percent on Nov. 8 when Barnes & Noble warned that fears and hoaxes of more attacks similar to those of Sept. 11 was stifling sales growth as shoppers shunned bookstores and malls.

But in the first 24 days of November, sales at Barnes & Noble superstores open at least a year rose 3.2 percent, it said. That included a 4 percent gain over the key Thanksgiving weekend, the start of the holiday shopping season.

Total Sales Up

Total sales in the quarter rose 3 percent to $791 million from $768.7 million, Barnes & Noble added.

"Their November book superstore sales look like they were above expectations, above what they originally expected," said William Armstrong, an analyst at C.L. King & Associates.

"So if sales are above plan, profits in the fourth-quarter will be above plan if the sales growth continues. The market is reacting accordingly," he added.

He said the November increase in superstore same-store sales bodes well for the current quarter, since the company had previously warned that fourth-quarter superstore same-store sales will likely be flat to up 2 percent.

"These numbers are trending in the right direction and if they can maintain those numbers through Christmas, clearly there will be some upside to the profit projections. I think management was being very conservative in their previous guidance," added Armstrong, who has a "strong buy" rating on the stock.

Barnes & Noble, which ranks ahead of the nation's No. 2 bookseller Borders Group Inc., reported a net loss of $6.8 million, or 10 cents a share, in the quarter ended Nov. 3, compared with a net loss of $5.2 million, or 8 cents a share, a year earlier.

Ten analysts polled by Thomson Financial/First Call had forecast a mean loss of 10 cents a share, with estimates ranging from a loss of 8 cents to 12 cents.

Barnes & Noble, which on Nov. 8 also warned of a shortfall in full-year earnings, said comparable-store sales at the company's Gamestop video-game stores rose 83.7 percent so far in November, including a 68.2 percent gain over Thanksgiving weekend.

Video Game Buzz

The company said November was "an especially robust month" as expected, due to the launch of Microsoft Corp.'s new Xbox video gaming console and Nintendo Co. Ltd.'s rival GameCube.

Candace Corlett, a retail industry consultant at WSL Strategic Retail, said she also expected Barnes & Noble to see sales growth ahead of Christmas, despite lingering worries about the economy.

"They are a wonderful source for gifts in an environment that makes you feel comfortable," she said.

Since the Sept. 11 hijacker attacks on New York and Washington, Barnes & Noble shares are down almost 18 percent, while shares of rival Borders Group, which also posted a loss for the third quarter, are off 11 percent.

According to First Call, analysts expect Barnes & Noble to earn $1.18 to $1.32 a share in the fourth quarter, with a consensus of $1.26. The retailer had a profit of $1.21 in the year-ago fourth quarter.