Books-A-Million stock surges after Web site news
Reuters Story - November 25, 1998 19:27
By Nicole Volpe
BIRMINGHAM, Ala., Nov 25 (Reuters) - Shares of Books-A-Million Inc. surged on Wednesday after the regional book
retailer said it revamped its Web site, offering steep discounts that seem to undercut Amazon.com Inc., the online leader.
Shares of Books-A-Million, with 172 stores in the southeastern United States, jumped $8.56 to $12.94, making the issue one
of the biggest gainers on the Nasdaq. Volume was more nearly 33 million shares.
The company's stock is the latest to rally amid the pre-holiday excitement surrounding online retailing this year. Selling books
online has been one of the proven successes of electronic commerce, and Amazon.com has been one of the best-performing
stocks on the market, up 320 percent this year.
The Books-A-Million site, (www.booksamillion.com), offers discounts of up to 46 percent, through its Millionaire's Club
Discount Card, on books that are bestsellers in its retail stores.
By contrast, Amazon.com, the leading online bookseller, offers discounts of up to 40 percent on selected titles.
Books-A-Million also promises cardholders 37 percent discounts on all other in-stock hardcovers and 28 percent off all
in-stock paperbacks. "Through our Web site, we hope to extend this franchise to a broader audience," Books-A-Million Chief
Executive Clyde Anderson said in a statement, referring to the Internet's national or even global reach. "We believe we can
bring the diversity and excitement of our retail stores to the Internet, and we will be continuing to add new products and
features in the months ahead," Anderson said.
At least one analyst was skeptical that the price cuts and other features of the site, such as editorial comment around the
books, justified the enormous surge in the stock price.
"I do think this is overdone. It has me perplexed," said Maureen McGrath, a Salomon Smith Barney specialty retail analyst,
who pointed out the company's Web site was not entirely new, and that the company's primary focus remained on its
brick-and-mortar chain stores.
"I don't think this means 150 percent," said McGrath, who called the run on the stock a knee-jerk market reaction, referring to
the price move at the time of the interview.
"This business costs them money, and I don't think it will add to their earnings for a couple of years. They are a four-wall retail
business that is not performing to expectations," she said.
Still, McGrath acknowledged that there were "some nice enhancements" to the site including prices that seem competitive with
those offered by Amazon.com and Barnes & Noble Inc. .
The company was not immediately available for comment.
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