JP Morgan downgraded its rating of the bookseller from from overweight to neutral and BN shares dropped, faster than the rest of the market, which also fell. The change was not unexpected, since company has announced that the holiday season was not as good as it had hoped, with music sales in particular not meeting expectations.
Analyst Charles Grom said: "Barnes' disappointing holiday comparison was surprising and suggested to us that no retailer is 100 percent immune from today's recessionary backdrop; provided the company's aforementioned tough compares, we think it's likely that Barnes & Noble could run negative same-store sales in 2008." Grom cut his profit estimate by 26 cents a share. He speculated that price competition from Borders might cause BN to reduce their own margins. No mention of the deeper discounters, like Amazon.
Competition among the brick and mortar stores has become increasingly fierce as consumers turn to online shopping and online sellers try to replicate the experience of looking at and skimming a book before they buy. Coffee shops, candy, toys, and stationery have not filled the gap not provided the long term pull it was once hoped they would.
A Downside of Blogging
Some days the news is less good than you wish it was. Today, four obituaries in a row, each of which needs its own header.
2008.02.12 in Commentary | Permalink | TrackBack (0)
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