Book seller Barnes & Noble Inc. (NYSE: BKS) pulled a rabbit out of its own hat and posted diluted EPS of $0.26 in 2Q 2007 last week. But there is always a catch. $0.12 of those earnings derived from a tax benefit and $0.03 derived from lower than expected costs related to closing a huge distribution warehouse. Net earnings for the quarter were just over $18 million or $0.12 per share. Total sales increased 7.6% to $1.2 billion. In-store sales were up 4.4% while online sales were up 18%. Enjoy these increases while they last. Almost all of the good news is a result of the release of the last Harry Potter installment. Barnes & Noble sold just over 2 million copies of the title as of early August. Without Harry Potter, sales increased barely 1%.

Bricks and mortar book stores are a mature business. Possibilities for growth are very hard to come by. CEO Steve Riggio admits as much even while trying to sound upbeat about 3Q releases planned by former President Clinton, former Fed Chair Greenspan and musician Eric Clapton. No offense to these gentlemen, but Harry Potter they ain't. 3Q store sales are forecast to be flat with a loss per share of $0.06-$0.10. Barnes & Noble also posted losses in 1Q, so an increase in FY guidance to $1.69-$1.87 from $1.49-$1.67 is puzzling. Perhaps management is expecting a huge 4Q surge in book buying for the December holidays. Guess they missed the recent report stating 25% of adults surveyed in the U.S. read ZERO books the previous year.

The company is still buying back its shares, adding 500,000 repurchased shares in 2Q to the 750,000 shares repurchased in 1Q. Barnes & Noble has budgeted $400 million for stock buy backs. The stock is surprisingly volatile. It began the year trading at $40.29, hit $42.88 in May, but closed at $35.80 on 27 August. By all means, shop at Barnes & Noble, but spend investment dollars elsewhere.

Barnes & Noble (BKS) profits from Harry Potter magic originally appeared on BloggingStocks on Tue, 28 Aug 2007 13:03:00 EST. Please see our terms for use of feeds.

I came in late on the Battle of the Brands and missed a chance to join in the fun, but I have been keeping my own list, for what it's worth:

Borders Group Inc. (NYSE: BGP) vs. Barnes & Noble, Inc. (NYSE: BKS) -- Borders. Better coffee, magazine selection, and easy chairs. If only they didn't waste so much store space on those bound-paper things; there are shelves and shelves of them getting in the way of the gift cards, games, and Will Ferrell DVDs.

Krispy Kreme Doughnuts (NYSE: KKD) vs. Dunkin' Donuts -- Krispy Kreme. Their trademark glazed ring is only 200 calories, while Dunkin' Donut's standard cake donut runs to 300. Stated in standard American consumption units, that would be 2,400 calories/dozen vs. 3,600.

Home Depot, Inc. (NYSE: HD) vs. Lowe's Companies, Inc. (NYSE: LOW) -- I choose Home Depot, for their attire. Every time I'm in a Lowe's, I find myself wondering why they can't wash their vests. Perhaps they should acquire Aramark.

Time Warner Inc.'s (NYSE: TWX) Time magazine vs. Washington Post Co.'s (NYSE: WPO) Newsweek -- Time. I found a couple of pages in the last issue of Newsweek where I actually had to read text. What's up with that?

Charmin, a product of Procter & Gamble (NYSE: PG), vs. Northern, a product of Koch Industries -- Charmin wipes out the competition. To paraphrase a CEO of BFI, their bottom line is my bottom line.

Jockeys vs. Boxers -- jockeys. They're holding a high pair.

Left turns vs. right -- Right. It's hard to hold the cell phone without spilling my coffee when turning left.

Babies vs. kittens -- They both start off cute, but evolve into creatures that lie around the house expecting to be pampered without bothering to show gratitude. A cat, however, won't expect you to send it to Yale, then blow off senior finals to go to the Burning Man Festival.

Baseball vs. waiting for a Twinkie to show signs of decay -- Baseball. They bring beer to you.

Battle of the Brands: sweeping up afterward originally appeared on BloggingStocks on Fri, 13 Apr 2007 15:40:00 EST. Please see our terms for use of feeds.