PW NewsLine

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For Chain Stores, Comparisons Finally Favorable - Big Bird Wings It To China
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For Chain Stores, Comparisons Finally Favorable

The nation's two largest booksellers have something they haven't had in a long time -- good news to report. After several successive quarters of slogging through a weak book market, Barnes & Noble and Borders Group today both reported significant sales gains in their second quarters. They posted increases not only in total revenue, but also in same store sales, a more telling indication of how the retailers are performing. The improved results echo those disclosed by Books-A-Million yesterday.

B&N's comparable store sales rose 5.1% in July -- primarily on the strength of Harry Potter -- and 5.6% for the quarter. Comparable store sales even edged up at B. Dalton, rising 0.8% in July and 0.7% for the quarter. Borders had less dramatic growth, with same store sales rising 1.7% at the superstores and 3.7% at Waldenbooks.

While the June release of "Harry Potter and the Order of the Phoenix" drove much of the growth, bookselling executives stress that the upswing wasn't just about a one-book wonder. "It's important to note that sales were strong throughout the entire second quarter," says B&N CEO Steve Riggio. "The uptick actually began with a strong Memorial Day, before Harry Potter."

Riggio credits media attention for turning several books into blockbusters in the second quarter. They include Hillary Clinton's " Living History," John Steinbeck's "East of Eden" -- which became a bestseller hours after Oprah made it her first classic book club pick -- and A. Scott Berg's "Kate Remembered."

Barnes & Noble's bookstore sales jumped to $977.6 million in the quarter ended Aug. 2, a 10.5% increase compared with the second quarter of the prior year. That includes $912.6 million in superstore sales and $51.3 million from B. Dalton.

The retailer is so encouraged by the trend it's raising its forecast for same-store sales growth in the third quarter and full year, projecting growth in the range of 2% to 4% for the third quarter and 1% to 2% for the year.

Deep discounting of the Harry Potter book held down profits at B&N, but that was offset by higher margins in other areas. The bookselling division had operating profits of $26 million for the quarter, compared with $24 million during the comparable period the prior year.

Borders Group had total sales of $826.9 million for the quarter ended July 27, an 8.3% increase compared with the second quarter of the prior year. That included $570 million at the superstores and $168.7 million at the mall-based stores. Borders International sales continue to grow rapidly, with sales up 34.2% to $88.2 million. Company-wide operating income increased to $9.8 million, from $8.0 million. Borders is forecasting comparable store sales will be down or flat for the full fiscal year.