Barnesandnoble.com (Nasdaq: BNBN) reported a wider-than-expected loss for the second quarter late Monday, as the company spent money on a slew of new ventures amid a general slowdown in e-commerce. Company officials also said the loss for the year may be higher than previously predicted.
Sales for the quarter rose 77 percent to $67.4 million (US$), but the company’s losses widened to $39.9 million, or 27 cents per share, from $22.0 million, or 17 cents, in the year-earlier quarter. Analysts were looking for a loss of about 18 cents per share in the latest quarter, as well as a larger rise in revenue.
Shares Fall; Analysts Cut Ratings
Investors sent Barnesandnoble.com shares down to 4 1/16 Tuesday, a new 52-week low. Analyst Anthony Noto at Goldman Sachs lowered his rating on the company to “market perform” from “market outperform,” and cut revenue and earnings estimates for the year following the news.
“The revenue shortfall, despite higher spending, raises concerns about the company’s ability to leverage its multi-channel assets,” Noto wrote in a research note.
Analysts at Prudential Securities and Banc of America Securities also reportedly lowered their ratings.
A Busy Quarter for New Ventures
During the quarter, the company bought a minority stake in notHarvard.com, an online education company; invested about $20 million for a 25 percent stake in MightyWords, an online publisher; introduced Barnes & Noble Television, a venture to broadcast information about books over the Web; and launched a publishing service for established and aspiring writers.
The company’s plan to branch out poses risks, making it “critical” that the new ventures are well managed, according to Noto. “Lack of momentum from these new initiatives would continue to drive bottom-line pressure,” he said.
Customers, Orders Rise
Barnesandnoble.com said it added more than 700,000 new customers during the quarter, bringing the total to more than 5.5 million. Repeat customers accounted for 70 percent of total orders, up from 61 percent a year earlier. The company said it has enough cash to cover its expenses for the next two years, and management is “confident” of achieving its goal of reaching an operating profit within that time frame.
The company is not the only e-tailer to see a soft quarter. Last week, Internet giant Amazon.com (Nasdaq: AMZN) reported a wider loss for the second quarter, as management focused on moving toward profitability rather than increasing revenue at all costs.