Stay Away From This Retailer: Barnes & Noble, Inc. (BKS), Amazon.com, Inc. (AMZN)

New York-based book retailer Barnes & Noble, Inc. (NYSE:BKS) engages in selling magazines, DVDs, newspapers, gifts, music, and games. As of January 26, 2013, the company had 1355 stores across United States, including 678 college bookstores.

Recently, Barnes & Noble (NYSE:BKS) released its earnings for the third quarter of 2013. It wasn’t able to meet earnings estimates, and posted a net loss of more than $6 million. Now, the big question is what’s in store for the company in the future?

Quarterly earnings

In 3Q’13, Barnes $ Noble reported a net loss of $6.1 million, or $0.18 per share compared to earnings of $52 million, or $0.71 a share in the same quarter last year. Revenue didn’t meet estimates and dipped 10.3% to $2.23 billion. The major reason behind this lackluster performance was a sharp dip in the company’s sales related to Nook and e-books.

The company recorded a $190.4 million loss on its Nook business. In the case of digital content, sales grew 7%. Sales at stores open at least 15 months (excluding Nook products) declined 2.2%. As far as college bookstores were concerned, same-store sales dipped 5.2%.

Going forward

In the fourth quarter of 2013, analysts expect Barnes & Noble, Inc. (NYSE:BKS) to report a loss of $0.83 per share on revenue of $1.39 billion. For the full year, analysts estimate a net loss of $1.05 a share. For 2014, analysts’ estimates stand at $0.89 loss per share on revenues of $7.03 billion.

Valuation

Barnes & Noble, Inc. (NYSE:BKS)’s negative profit margin of 0.62% depicts the fact that the company isn’t generating any income on its sales. An operating margin of (0.28)% doesn’t help either. Moreover, analysts don’t expect Barnes & Noble, Inc. (NYSE:BKS) to start earning a profit in the near future. A negative EPS estimate for 2013 and 2014 is a testimony to this. A mean recommendation of 2.7 on the sell side clearly shows that it’s way behind its competitors such as Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG) . Therefore, it doesn’t seem to be an attractive buy.