Earnings are not down. They're up substantially from 2001. They're only down compared to the too optimistic estimate. BKS sells most of its books at full price. Bestsellers, sold at 30% off, only comprise 3% of sales. I believe that the gross margin when a book is sold at full price is about 40%. While they can and should do whatever possible to increase sales and reduce costs, earnings are quite good, even with the warning. However, a warning almost always hurts a stock in the short term. When a fundamentally strong company warns, it is usually time to buy after the initial decline. I bought more BKS @ 17.75. I suspect that 6 months from now, I'll be pleased that I did.