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Barnes & Noble Posts Loss, Cuts Annual Guidance

Tuesday, 24 Aug 2010 09:02 AM

Barnes & Noble Inc. posted a first-quarter loss on legal expenses related to its proxy fight with a major shareholder, the struggling book seller said Tuesday.

The company cut its annual earnings outlook on the costs related to fighting billionaire financier Ron Burkle.

The largest U.S. traditional book seller said it lost $62.5 million, or $1.12 per share, in quarter ending July 31. Last year during the same period it earned $12.3 million, or 21 cents per share.

Revenue rose 21 percent to $1.4 billion, although the cost of sales rose as the company invested more in its online book store and Nook e-reader.

Analysts expected a loss of 80 cents on revenue of $1.4 billion, according to Thomson Reuters.

Shares fell 71 cents, or 4.7 percent, to $14.79 in early trading Tuesday.

Earlier this month the company made a surprise announcement that it was exploring options that include putting itself up for sale.

Barnes & Noble said its pretax legal expenses in the quarter were $9.5 million or 11 cents per share.

The company cut its full-year guidance by 25 cents per share, now expecting a loss to range from 25 cents to 65 cents per share. Excluding the costs, it expects to break even or lose as much as 40 cents per share.

The New York-based company has been fighting Burkle and his Yucaipa Cos. investment arm, which has about a 19 percent stake in the company.

Burkle unsuccessfully sued Barnes & Noble in a bid to expand his stake even more without triggering a shareholder rights plan. Such plans, commonly called a "poison pill," are designed to prevent hostile takeovers. When that lawsuit was dismissed, Burkle said he would nominate a slate of three directors to the company's board. The annual shareholder meeting is Sept. 28.

The book seller's shares have fallen more than 20 percent since the beginning of the year as the industry copes with Americans spending less on books and other discretionary items during the economic downturn. Shoppers also are shifting away from printed books toward electronic versions, just as they moved away from compact discs toward digital downloads of music.

The company is focusing on e-books and its e-book reader Nook to counter increased online competition and discounters. It said on Tuesday it has now achieved greater market share in digital books than in physical books. It said one-quarter of Nook customers are new to Barnes & Noble's website, and people with Nooks have increased their spending by about 20 percent.

Revenue at Barnes & Noble.com rose 42 percent to $145 million in the quarter, although revenue in stores fell 2 percent to $1 billion.

Smaller rival Borders Group Inc. reports second-quarter results Sept. 1.

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Barnes Noble Inc. posted a first-quarter loss on legal expenses related to its proxy fight with a major shareholder, the struggling book seller said Tuesday. The company cut its annual earnings outlook on the costs related to fighting billionaire financier Ron...
US,Earns,Barnes,&,Noble
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2010-02-24
Tuesday, 24 Aug 2010 09:02 AM
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