Barnes & Noble Inc. posted a narrowed first-quarter loss and better revenue. It was helped by strong digital content sales and purchases of books like "Fifty Shades of Grey." The New York company also said its performance was helped by the liquidation of bookstores owned by one-time rival, Borders.
Mitchell Klipper, CEO of Barnes & Noble Retail, answered this question during a conference call.
QUESTION: You are going to be anniversarying most of the Borders' closings reasonably soon. We've seen scenarios like this in retail several times over the past several years. In some instances, the halo, or the tailwind, lasts beyond the anniversary and in some instances it begins to fade out.
I guess your guidance would imply some deceleration in the bookstores, which suggests that this benefit would begin to fade out. Could you be a bit more explicit with how you think that cycling those Borders' closings will in fact impact your bookstore business?
ANSWER: We do have a halo effect and it does continue into the second year and the third year as well. Of course, the second year is nowhere near the impact of first year and the third year is not as big of an impact of the second year. How much you pick up the first year, the second year and the third year all depends on market-by-market, store-by-store and how good was the location that closed compared to the location that you have. So again, its market-by-market and store-by-store. We do anticipate the increase (in business) from the Borders' closings to continue, but at a much more moderate rate.
