Barnes & Noble Q2 earnings fall

Retailer expands DVD section

By Danny King -- Video Business, 8/21/2008

AUG. 21 | Barnes & Noble said today that its fiscal second-quarter DVD business benefitted from more store space despite overall company sales declining 1.6% as year-earlier revenue was boosted by the final Harry Potter book release.

Home entertainment sales are “holding up nicely” after the largest U.S. bookstore chain expanded its DVD space and shrunk its music section, Barnes & Noble CEO Stephen Riggio said on a conference call with analysts today. The company’s music sales had a “double-digit decline” for the quarter ended Aug. 2, said Riggio, who wasn’t more specific about music and DVD figures.

U.S. home entertainment sales for the first half of the year were little changed as a fourfold jump in Blu-ray Disc revenue offset the effects of an economic downturn. U.S. sales of CDs have stalled as the economy softened and customers downloaded more music instead of buying it in stores.

Overall, Barnes & Noble’s net income fell 15% to $15.4 million, or 27¢ a share, from $18.1 million, or 26¢, a year earlier, as same-store sales declined 4.7%. Excluding year-earlier revenue from J.K. Rowling’s Harry Potter and the Deathly Hallows, same-store sales dropped 1.5%, the company said today.

Earlier this week, Marie Toulantis, who ran the company’s Web operations for the past six years, stepped down as CEO of Barnes & Noble.com after more than doubling the company’s Internet sales as a percentage of Barnes & Noble’s total revenue.