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Barnes & Noble 3Q in red
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November 19, 1998: 3:12 p.m. ET
Cites online costs for 7 cent-shr loss; sees 4Q gain on Bertelsmann sale
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NEW YORK (CNNfn) - Bookstore titan Barnes & Noble on Thursday reported a net loss of 7 cents per share for the third quarter, due largely to costs of its new online operations, but predicted the sale of a half-stake in its Web venture to Bertelsmann AG would reap a $64 million gain in the fourth quarter.
For the third quarter ended Oct. 31, Barnes & Noble posted a loss -- including its online bookselling operations -- of $4.6 million, compared with earnings of $65,000, or flat on a per share basis, for the same quarter last year.
During the quarter, Barnes & Noble incurred a $21 million, or 18 cents per share, loss for its barnesandnoble.com online operations.
Nonetheless, the company said Bertelsmann's recent purchase of a 50-percent stake in the Internet site for $200 million would yield a $64 million profit in the current three-month period.
Bertelsmann, a vast German media group, indefinitely postponed the launch of its own Web venture in the United States after the deal. Barnes & Noble plans to spin off parts of the Web operation in an initial public offering whose date is yet to be set.
The company's retail-only business reported a record operating profit of nearly $20 million, up abut 26 percent from last year. Retail net earnings more than doubled to $7.5 million, or 11 cents a share, compared with earnings of 5 cents a share last year.
Analysts following the company predicted a loss of 3 cents a share, according to First Call consensus estimates.
Revenue for the quarter rose to $674 million, up from $615 million last year.
"Our record third-quarter retail earnings were fueled by industry-leading comparable-store sales and illustrate our ability to execute in this market sector," said company Chairman and Chief Executive Leonard Riggio.
"We are pleased with the favorable trends in barnesandnoble.com's sales growth, customer counts and increasing number of relationships with preeminent affiliates," Riggio added. "We are now the No. 3 shopping site on the World Wide Web, according to Media Metrics."
Shares of Barnes & Noble (BKS) shot up 2-1/4 per share, or nearly 7 percent, to 34-7/8 on the New York Stock Exchange following the news. By midafternoon Thursday the stock had eased slightly, trading up 5/8 to 33-1/4.
For the nine-month period, Barnes & Noble lost $13.6 million, or 20 cents a share, on sales of $2 billion. In the same period last year, Barnes & Noble lost $5.2 million, or 8 cents a share, on sales of $1.8 billion.
Earlier this month, Barnes & Noble announced it will acquire Ingram Book Group, a leading wholesale distributor, for $600 million.
The acquisition, which teams the nation's largest bookseller and its largest distributor, is expected to help Barnes & Noble improve distribution efficiency and lower costs.
It also, however, gives Barnes & Noble an interesting edge in the fast-growing online book-selling business.
Ingram is the largest supplier of books to Amazon.com, the electronic commerce giant that cornered the cyberspace bookselling market and bills itself as "Earth's biggest bookstore."
Barnes & Noble, which is making moves to compete aggressively online, is forecasting Web-based sales of $75 million this year. 
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Barnes & Noble
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