Barnes & Noble Inc., the largest U.S. bookseller, said Thursday its second-quarter earnings rose 9 percent, boosted by sales of J.K. Rowling's "Harry Potter and the Deathly Hallows."
The company also said it expects a loss in the third quarter, but increased its yearly guidance to reflect tax benefits and lower-than-expected costs for closing a distribution center.
The company's shares rose 90 cents, or 2.6 percent, to $35.82 Thursday. The stock has traded between $30.01 and $43.80 over the past 52 weeks.
Profit for the quarter ended Aug. 4 rose to $18.1 million, or 26 cents per share, from $16.6 million, or 24 cents per share, in the year-ago period. Results include 12 cents per share in previously unrecognized tax benefits and 3 cents per share for lower-than-forecast distribution center closing costs.
Excluding those items, earnings totaled 12 cents per share in the latest quarter, at the high end of Barnes & Noble's forecast of earnings of 8 cents to 12 cents per share.
Revenue rose nearly 8 percent to $1.24 billion.
Analysts surveyed by Thomson Financial expected net income of 12 cents per share on revenue of $1.22 billion. The earnings estimates typically exclude one-time items.
Chief Executive Steve Riggio said during a conference call that sales of "Harry Potter and the Deathly Hallows" sold even better than expectations during the first few days but "tailed off quite a bit" after that, as the book became available at mass merchants and non-bookstore retailers.
"Nevertheless, 'Harry Potter and the Deathly Hallows' continues to sell well, it remains our number one best-selling hard cover title and we expect to sell hundreds of thousands of copies through the end of the year," he said.
Aside from "Harry Potter," best-selling books during the quarter included "The Reagan Diaries," Al Gore's "The Assault on Reason," Conn and Hal Iggulden's "The Dangerous Book for Boys," Walter Isaacson's "Einstein," Khaled Hosseini's "A Thousand Splendid Suns" and Janet Evanovich's "Lean Mean Thirteen."
The company said it expects a loss of 6 cents to 10 cents per share in the third quarter, on same-store sales growth that is flat to up in the low-single digits.
Analysts surveyed by Thomson Financial predict a loss of 16 cents per share.
For the year, the company expects earnings to be $1.69 to $1.87 per share, up from previous guidance $1.49 to $1.67 per share.
Results include a 12-cent per share benefit from income taxes, a 3-cent per share benefit from lower distribution center closing costs, and a 5-cent per share benefit from a reduced fully diluted share count.
Analysts, who typically exclude one-time items, expect earnings of $1.80 per share.
Same-store sales _ sales at stores open at least a year _ rose 4.4 percent. Excluding sales of "Harry Potter and the Deathly Hallows," which was released in July, same-store sales rose 1 percent. The same-store sales gauge is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.
Deutsche Bank analyst Dave Weiner said in a note to investors Thursday that results were in-line with expectations but noted that the 1 percent same-store sales increase excluding "Harry Potter" represents a two- or three-year trend of deceleration from prior quarters.
He maintained his "Hold" rating on the stock and $37 price target.
