Barnes & Noble swings to profit

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NEW YORK -- Barnes & Noble Inc. boosted its earnings outlook on Tuesday and recorded strong third-quarter profits on sales of new releases, sending shares up 10%.

The New York-based company recorded a profit of $4.38 million, or 7 cents per share, for the three months ended Nov. 3. That compared with a $2.77 million loss, or 4 cents per share in the year-ago period.

The company recorded a 5.7% increase in sales to $1.2 billion, from $1.11 billion in the year-ago period.

Analysts polled by Thomson Financial expected a 8 cent loss on sales of $1.145 billion. Shares jumped 6%, or $1.95, to $34.57 at the open of trading.

Shares rose $3.35 to $35.97 in afternoon trading.

"The company's sales continued to perform at the higher end of expectations, due in part to strong sales of new releases and bestsellers, which combined with a better than expected gross margin rate enabled the company to outperform its third-quarter earnings expectations," said Steve Riggio, chief executive officer of Barnes & Noble, in a statement.

Bestselling titles during the quarter included Alan Greenspan's "The Age of Turbulence," John Grisham's "Playing for Pizza," Ken Follett's "World Without End," Nicholas Sparks' "The Choice" and Stephen Colbert's "I Am America (and So Can You!)."

Riggio said the company has been encouraged by sales trends at Barnes & Noble.com that began earlier this year and continued through the third quarter, when the company launched a newly designed Web site.

Barnes & Noble store sales increased 4.5% to $1 billion, with same-store sales increasing 2.6% for the quarter, at the high end of the company's projections. Same-store sales, locations opened at least a year, are considered a key indicator of a retailer's health.

Barnes & Noble.com sales were $108.2 million for the quarter, a 14.5% same-store sales increase compared with the prior year period.

For the fourth quarter and full year, the company expects same-store sales at Barnes & Noble stores to increase in the low single digits. The company previously expected full-year same-store sales to range from unchanged to slightly positive.

Barnes & Noble's fourth-quarter earnings per share is expected to be in the range of $1.67 to $1.86. Analysts polled by Thomson Financial expected $1.71 per share.

The company now expects full-year earnings per share to be in a range of $1.91 to $2.09, compared with previous guidance of $1.69 to $1.87. Analysts had expected 1.87 per share for the year.

For the nine-month ended Nov. 3, net income was $20.76 million, or 31 cents per share, compared with $23.79 million, or 34 cents per share, in the year-ago period. That compared with $3.56 billion compared with $3.38 billion in the year-ago period.

Barnes & Noble announced a dividend of 15 cents per share.
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