FRAMINGHAM (08/01/2000) - Barnesandnoble.com Inc. yesterday reported a $45.3 million loss for the second quarter ended June 30, more than double the $22 million shortfall in the same period last year. Excluding stock-based compensation and some one-time charges, Barnesandnoble.com posted $39.9 million in losses.
Financial analysts expected the New York-based company to post an 18-cent-per-share loss; Barnesandnoble.com reported a 31-cent-per-share loss.
Barnesandnoble.com said expenses were higher than anticipated in the second quarter because of a "record number of initiatives." Its investments included approximately $20 million for a 25% equity stake in MightyWords, a digital content provider; a new Web site design; and same-day delivery service in Manhattan.
Sales were affected by a "widely publicized seasonal slowdown" that hit all online retailers, the company said. Still, sales rose to $67.4 million in the quarter, up from $38.2 million for the same period in 1999.
Barnesandnoble.com stock was down more than 15%, to $4.31 per share, in late-morning trading today. The stock had been as high as $23.50 per share within the past 12 months.
The New York-based online bookseller said it expects expenses to increase in the third quarter, and the company forecast higher losses for the year.
Barnesandnoble.com didn't specify how much the annual loss could be. However, the company said this year's investments should place the company "in a strong position for dramatic growth" in 2001.
The company also reported that its cost of acquiring new customers dropped to $21.45 in the first half of this year, vs. $27.82 at the beginning of 1999.
Rival online retailer Amazon.com Inc. late last month posted an $89 million loss for its second quarter, as sales totaled $578 million.
Barnesandnoble.com said it had $356 million in cash and marketable securities with no debt, which is enough cash for "at least the next 24 months."
Alan Alper, an analyst at Gomez Advisors Inc. in Lincoln, Mass., said Barnesandnoble.com's woes reflect the online retail industry.
"Most e-tailers have had a hard time. They have to spend out ahead of revenues," Alper said. Additionally, retail is a seasonal business, and the largest chunk of sales takes place in the fourth quarter, he said. "It's tough to keep moving forward."
Barnesandnoble.com did add more than 700,000 new customers during the second quarter, and its total customer base now tallies more than 5.5 million. Repeat customer orders reached 70% for the quarter, a 61% increase from a year ago.
Alper said customer numbers are less important than how much those customers are buying and how often they return. The key is if customers are buying best-sellers compared with hard-to-find books, Alper said.
Despite Barnesandnoble.com's wider losses, Alper noted, the company "is in it for the long term. And that's not inexpensive or trivial."