Despite Growth, Profits Still Elude BarnesAndNoble.Com

Barnes and Noble, Inc. (NYSE: BKS) reported that its online unit, BarnesandNoble.com, reached $70.2 million (US$) in sales during 1998, representing an impressive increase of 381 percent over the previous year’s figures. The results topped the company’s projections of $60 to $65 million, thanks to a stronger than expected holiday sales season. However, despite its strong growth, the bookseller’s e-commerce unit is still operating at a loss.

Yet, according to Barnes and Noble CEO Leonard Riggio, the company was pleased with its ability to maintain brick-and-mortar retail sales growth, and still encourage customers to buy books online.

“By combining the sales of our retail stores with those of BarnesandNoble.com, it becomes increasingly clear that the Internet business is strongly accretive,” he said, adding that the company’s customer base and market share are growing as a result of its entry into e-commerce.

8 Million Titles Offered Online

With more than 8 million titles available for purchase online, compared with 4.7 million titles for rival Amazon.com, BarnesandNoble.com claims to be the world’s largest online bookseller. It is also the exclusive bookseller on America Online (Keyword: bn). Additionally, the company reports that it has become the fourth largest e-commerce site, and ranks among the top 30 most popular Internet destinations, according to Media Metrix, an Internet monitoring firm.

Amazon.com Still Far Ahead

Media Metrix’s January report ranked Amazon.com as the 12th most-visited site, with more than 9 million unique visitors accessing the site either from home or from work. And, while Barnes and Noble might be the largest online bookseller in terms of titles, it has a long way to go to top Amazon.com, whose annualized e-commerce revenue exceeds a whopping $1 billion.

In the fourth quarter of 1998, Amazon.com reported sales of $252.9 million, and 1 million new customers. However, Amazon.com, too, is still operating at a loss, and actually expects the loss to widen as it builds out infrastructure during 1999.

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