"There's going to be some redundancies and were goingto be paying double rent while we're transitioning tothe new distribution center," says CFO JosephLombardi. The bookseller's has forecast an eight centsper share impact for the costs associated with these redundancies for the year. Moreover, he says that the company will spend $40 million related to the completion of the distribution center, which is expected to be operational later this year.
Barnes & Noble says its first quarter earnings pershare is forecast to be in a range of 11 cents to 13cents and for the full year earnings per share areexpected to be in a range of $1.94 to $1.98. From asales perspective, the bookseller expects comparablestore sales to be in the low single digits, and forthe full year comparable store sales are expected toincrease about 3%. Sales at Barnes & Noble.com areexpected to increase at similar levels.
"We're going to transition to our new distributionfacility correctly, regardless of the short-termblip," says CEO Steve Riggio.
In addition to the warnings, the bookseller's fourthquarter 2004 and full-year earnings disappointed WallStreet. The company says that for the three monthsended Jan. 29, it earned $115.6 million, or $1.56 pershare, compared with $130.2 million, or $1.65 pershare for the same period last year. That's an 11%decrease in fourth quarter profits.
The retailer attributes the decrease to the recentspin-off of its Gamestop Corp. division. Excluding theimpact of Gamestop, profits were $112.3 million, or$1.52 a share - two cents below the $1.54 expectationsof analysts surveyed by Thomson First Call.
However, the picture looked a bit brighter for all of2004. "We think we're in a good place," Riggio says."We're pleased with same-store comps and our newstores performed better than expected." For the year,sales at the rose 7% to $4.1 billion, driven by a 3.1%gain in same-store sales. Those results trail the 2.7%growth that competitor Books-A-Million posted, butbeat rival Borders Group.
The company opened 32 new Barnes & Noble stores forthe year and closed 13 locations ending the year with666 stores.
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