Online bookseller Barnesandnoble.com Inc. posted a fourth-quarter loss yesterday and said that it will cut 350 full-time employees, or 16 per cent of its workforce, in a push to reach profitability.
For the quarter ended Dec. 31, Barnesandnoble.com in New York, which is owned equally by Barnes & Noble Inc. and Germany media giant Bertelsmann AG, posted a US$138.1 million loss, or 91 cents per share, compared with a loss of $38.4 million, or 27 cents per share, for the same period a year ago.
Its pro forma loss, which includes the acquisition of Fatbrain.com Inc., an online bookseller specializing in technical publications, was $54.2 million, or 36 cents per share. Analysts surveyed by First Call/Thomson Financial in Boston said that they expected the company to lose 31 cents per share.
In a statement, the company blamed the loss on “significant, one-time investments in distribution, technology and customer service to improve efficiencies and provide capacity for growth.”
Barnesandnoble.com said sales for the full year were $320.1 million, compared with $193.7 million for the previous year. The company ended 2000 with $217 million and said it expects to “consider financing in the first half of 2002.”
Barnesandnoble.com’s news comes on the heels of a similar announcement by its largest competitor, Seattle-based Amazon.com Inc., which announced last month that it was laying off 15 per cent of its workforce, or about 1,300 employees. Amazon also said it was closing a distribution center in Georgia and a customer service center in Seattle.
Barnesandnoble.com also said it will close one of its original processing centers in New Jersey and the Fatbrain.com fulfillment center in Kentucky, as well as consolidate other facilities.
David Kathman, an analyst at Morningstar Inc. in Chicago, said that although Barnesandnoble.com’s growth is better than Amazon’s, it’s losing more money.
“Amazon has consciously been trying to cut its losses over the past year and get to profitability, while Barnes & Noble is concentrating more on growth,” Kathman said. “Barnesandnoble.com has quite a bit more to go to reach operating profitability and generate cash rather than using it up. Its revenues were up 65 per cent this past year, but it is still using tons [of money]. Just its cash operating expenses were over 80 per cent of its revenues; that’s a lot of money. They have to get it way down to get profitable.”