December 01, 2011 at 11:42 AM EST
BKS Sinks 18%: FYQ2 Misses; Here Comes Nook Spending Push
Shares of Barnes & Noble (BKS) are down $3.13, or 18%, at $14.31 after the company this morning reported fiscal Q2 revenue below expectations and a surprise loss, despite strong growth in its “Nook” e-book reader business, and warned this year’s profit will come in at the low end of its prior expectation as it [...]

Shares of Barnes & Noble (BKS) are down $3.13, or 18%, at $14.31 after the company this morning reported fiscal Q2 revenue below expectations and a surprise loss, despite strong growth in its “Nook” e-book reader business, and warned this year’s profit will come in at the low end of its prior expectation as it ramps up spending to defend the Nook from Amazon.com’s (AMZN) “Kindle Fire,”

Revenue in the three months ended in October fell 0.6%, year over year, to $1.89 billion, yielding EPS of 17 cents a share.

Analysts had been modeling $1.98 billion and a 3-cent profit.

Retail sales fell 1%, year over year, the company said, and same-store sales were down 0.6% although they improved as the quarter went on.

Although the online business rose 17%, its losses on an Ebitda basis expanded to $59 million from $50 million, in part because of higher advertising, and in part because of the cut in price of the Nook devices announced in October.

The loss also includes a six-cent-per-share preferred stock dividend.

Barnes said the “Nook Tablet” tablet computer, which went on sale last month at the same time as Amazon’s Fire, became its fastest-selling Nook product, without disclosing actual sales of the device. Sales of the gadget at B&N stores jumped four-fold over the Black Friday holiday weekend, and content sold for the Nook “nearly tripled,” the company said.

In addition, the company said its gross margin online improved from 6% a year earlier to 15%.

Barnes said its full-year Ebitda will be at the low-end of a previously offered forecast of $210 million to $250 million as the company spends “more heavily to fuel digital growth,” with greater advertising for the Nook and promotions and costs for “strategic opportunities.”

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