Barnes & Noble Reports Record Sales of $7 Billion in Fiscal 2011

Digital Growth Fuels 78% Fourth Quarter BN.com Comparable Sales Increase

NEW YORK--()--Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported sales and earnings for its fiscal 2011 fourth quarter and full year ended April 30, 2011.

FISCAL 2011 RESULTS

For fiscal 2011, total sales increased 20% to a record $7 billion. Sales growth was fueled by inclusion of a full year of sales from Barnes & Noble College Booksellers (“College”) as well as a 50% sales increase at BN.com.

The rapidly growing digital business propelled the top-line at BN.com driven by the company’s NOOK™ eReader product line and digital content from the NOOK Bookstore™. BN.com comparable sales growth accelerated throughout the year, increasing 78% for the fourth quarter and 65% for the full year as compared to the same periods in fiscal 2010. BN.com sales were $217 million for the quarter and $858 million for the full year.

Barnes & Noble store sales were $943 million for the quarter and $4.4 billion for the full year. Comparable store sales decreased 2.9% for the quarter. Fourth quarter comparable store sales were temporarily negatively impacted by the liquidation of over 200 Borders bookstores during the quarter. As those stores have closed, the company is realizing incremental sales in those markets. For the full year, comparable store sales increased 0.7% led by the sale of digital products, which more than offset the decline in trade books.

College sales increased 3.5% for the quarter to $211 million and were $1.8 billion for the full year. Comparable store sales increased 2.8% for the quarter and decreased 0.8% for the year.

For the fourth quarter, the company reported a consolidated net loss of $59 million, or $1.04 per share.

For fiscal 2011, the company reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $163 million. The consolidated full-year net loss was $74 million, or $1.31 per share.

FISCAL 2012

The company has previously announced that it received a proposal from Liberty Media to acquire the company and that Liberty’s proposal is under review by the Special Committee of the company’s Board of Directors which is charged with reviewing strategic alternatives for the company. In light of the pendency of that proposal and its ongoing process, the Special Committee has determined that the company will not at this time issue sales or earnings guidance regarding the outlook for fiscal 2012.

CONFERENCE CALL

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Tuesday, June 21, 2011, and is accessible at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report first quarter earnings results on or about August 30, 2011.

ABOUT BARNES & NOBLE, INC.

Barnes & Noble, Inc. (NYSE:BKS), the world's largest bookseller and a Fortune 500 company, operates 705 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 636 college bookstores serving over 4.6 million students and faculty members at colleges and universities across the United States. Barnes & Noble conducts its online business through Barnes & Noble.com (www.bn.com), one of the Web's largest e-commerce sites, which also features more than two million titles in its NOOK Bookstore(TM) (www.bn.com/ebooks). Through Barnes & Noble’s NOOK(TM) eReading product offering, customers can buy and read eBooks on the widest range of platforms, including NOOK eBook Readers, devices from partner companies, and hundreds of the most popular mobile and computing devices using free NOOK software.

General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company's corporate website: www.barnesandnobleinc.com.

The All-New NOOK(TM), The Simple Touch Reader(TM), NOOK(TM), NOOK 1st Edition(TM), NOOK Wi-Fi 1st Edition(TM), NOOK Color(TM), Reader’s Tablet(TM), Fast Page(TM), NOOK Books(TM), NOOK Bookstore(TM), NOOK Newsstand(TM), PubIt!(TM), NOOK Kids(TM), Read In Store(TM), More In Store(TM), NOOK Friends(TM), LendMe(R), NOOK Library(TM), NOOK Boutiques(TM), The Barnes & Noble Promise(TM), NOOK Books en español(TM), NOOK Study(TM), Free Friday(TM), Lifetime Library(TM) and Read What You Love. Anywhere You Like(TM) are trademarks of Barnes & Noble, Inc. Other trademarks referenced in this release are the property of their respective owners.

Follow Barnes & Noble on Twitter (www.bn.com/twitter), Facebook (http://www.facebook.com/barnesandnoble) and YouTube (http://www.youtube.com/user/bnstudio).

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information relating to Barnes & Noble that are based on the beliefs of the management of Barnes & Noble as well as assumptions made by and information currently available to the management of Barnes & Noble. When used in this communication, the words "anticipate," "believe," "estimate," "expect," "intend," "plan," "will" and similar expressions, as they relate to Barnes & Noble or the management of Barnes & Noble, identify forward-looking statements. Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the general economic environment and consumer spending patterns, decreased consumer demand for Barnes & Noble's products, low growth or declining sales and net income due to various factors, possible disruptions in Barnes & Noble's computer systems, telephone systems or supply chain (including supplier risks resulting from our reliance on suppliers outside the United States, including suppliers in China), possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, potential effects of a bankruptcy filing by one of Barnes & Noble's largest competitors and actions taken by that competitor during bankruptcy, including store closures or store closures at a rate different than anticipated, sales of inventory at discounted prices and elimination of liabilities, higher-than-anticipated store closing or relocation costs, higher interest rates, the performance of Barnes & Noble's online, digital and other initiatives, effects of government regulation on the Company’s business, including its online and digital businesses (including with respect to the agency pricing model for digital content distribution), the performance and successful integration of acquired businesses, the success of Barnes & Noble's strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, including with respect to intellectual property, product and component shortages, the outcome of Barnes & Noble's evaluation of strategic alternatives, including a possible sale of Barnes & Noble, as announced on August 3, 2010 or the outcome of the proposal from Liberty Media announced on May 19, 2011, and other factors which may be outside of Barnes & Noble's control, including those factors discussed in detail in Item 1A, "Risk Factors," in Barnes & Noble's Quarterly Report on Form 10-Q, filed with the SEC on January 29, 2011, and in Barnes & Noble's other filings made hereafter from time to time with the SEC. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to Barnes & Noble or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Barnes & Noble undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this communication.

 
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
         
                   
13 weeks ended   13 weeks ended 52 weeks ended   52 weeks ended
April 30, 2011   May 1, 2010 April 30, 2011   May 1, 2010
 
Sales $ 1,371,220 $ 1,318,261 $ 6,998,565 $ 5,807,754
Cost of sales and occupancy   993,858     955,231     5,205,712     4,131,009  
Gross profit   377,362     363,030     1,792,853     1,676,745  
Selling and administrative expenses 399,716 367,969 1,629,384 1,392,207
Depreciation and amortization 57,956 56,683 228,647 207,774
Pre-opening expenses   (13 )   137     81     3,518  
Operating income (loss) (80,297 ) (61,759 ) (65,259 ) 73,246
Interest expense, net   17,657     10,139     57,350     28,237  
Income (loss) before taxes (97,954 ) (71,898 ) (122,609 ) 45,009
Income taxes   (38,538 )   (39,846 )   (48,652 )   8,365  
Net income (loss) (59,416 ) (32,052 ) (73,957 ) 36,644
Net loss attributable to noncontrolling interests   -     14     37     32  
Net income (loss) attributable to Barnes & Noble, Inc. $ (59,416 ) $ (32,038 ) $ (73,920 ) $ 36,676  
 
 
Basic earnings (loss) per common share:
Earnings (loss) attributable to Barnes & Noble, Inc. $ (1.04 ) $ (0.58 ) $ (1.31 ) $ 0.64
 
Diluted earnings (loss) per common share:
Earnings (loss) attributable to Barnes & Noble, Inc. $ (1.04 ) $ (0.58 ) $ (1.31 ) $ 0.63
 
Weighted average common shares outstanding
Basic 56,981 55,597 56,588 55,344
Diluted 56,981 55,597 56,588 56,153
 
Dividends declared per common share $ - $ 0.25 $ 0.75 $ 1.00
 
Percentage of sales:
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales and occupancy   72.5 %   72.5 %   74.4 %   71.1 %
Gross profit   27.5 %   27.5 %   25.6 %   28.9 %
Selling and administrative expenses 29.2 % 27.9 % 23.3 % 24.0 %
Depreciation and amortization 4.2 % 4.3 % 3.3 % 3.6 %
Pre-opening expenses   0.0 %   0.0 %   0.0 %   0.1 %
Operating income -5.9 % -4.7 % -0.9 % 1.3 %
Interest expense, net   1.3 %   0.8 %   0.8 %   0.5 %
Income (loss) before taxes -7.1 % -5.5 % -1.8 % 0.8 %
Income taxes   -2.8 %   -3.0 %   -0.7 %   0.1 %
Net income (loss) -4.3 % -2.4 % -1.1 % 0.6 %
 

BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
             
    April 30, 2011     May 1, 2010
 
 
ASSETS
Current assets:
Cash and cash equivalents $ 59,429 60,965
Receivables, net 150,294 106,576
Merchandise inventories 1,375,362 1,370,111
Prepaid expenses and other current assets   161,936   181,825  
Total current assets   1,747,021   1,719,477  
 
Property and equipment:
Land and land improvements 8,617 8,618
Buildings and leasehold improvements 1,204,108 1,212,567
Fixtures and equipment   1,670,488   1,594,048  
2,883,213 2,815,233
Less accumulated depreciation and amortization   2,178,562   2,003,199  
Net property and equipment   704,651   812,034  
 
Goodwill 524,113 528,541
Intangible assets, net 566,578 580,962
Other noncurrent assets   54,103   64,672  
Total assets $ 3,596,466   3,705,686  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 949,010 868,976
Accrued liabilities 785,667 755,432
Short-term note payable   -   100,000  
Total current liabilities   1,734,677   1,724,408  
 
Long-term debt 313,100 260,400
Deferred taxes 280,132 311,607
Other long-term liabilities 448,647 505,903
 
Shareholders' equity:
Common stock; $.001 par value; 300,000 shares
authorized; 90,465 and 88,225
shares issued, respectively 90 89
Additional paid-in capital 1,323,263 1,286,215
Accumulated other comprehensive loss (11,630 ) (13,212 )
Retained earnings 562,379 681,082
Treasury stock, at cost, 33,410 and 33,285 shares, respectively   (1,054,192 ) (1,052,356 )
Total Barnes & Noble, Inc. shareholders' equity   819,910   901,818  
Noncontrolling interest   -   1,550  
Total shareholders' equity   819,910   903,368  
Commitments and contingencies   -   -  
Total liabilities and shareholders' equity $ 3,596,466   3,705,686  
 

BARNES & NOBLE, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
       
                   
13 weeks ended   13 weeks ended 52 weeks ended   52 weeks ended
April 30, 2011 May 1, 2010 April 30, 2011 May 1, 2010
 
Sales  
Barnes & Noble Retail $ 942,727 973,464 $ 4,364,246 4,401,343
Barnes & Noble College 211,241 204,063 1,776,223 833,648
Barnes & Noble.com   217,252   140,734     858,096   572,763  
Total $ 1,371,220   1,318,261   $ 6,998,565   5,807,754  
 
Gross Profit
Barnes & Noble Retail $ 297,392 304,236 $ 1,334,126 1,429,450
Barnes & Noble College 51,384 45,924 383,343 177,164
Barnes & Noble.com   28,586   12,870     75,384   70,131  
Total $ 377,362   363,030   $ 1,792,853   1,676,745  
 
Selling and Administrative Expenses
Barnes & Noble Retail $ 253,310 261,702 $ 1,085,688 1,089,095
Barnes & Noble College 60,665 63,898 263,747 152,168
Barnes & Noble.com   85,741   42,369     279,949   150,944  
Total $ 399,716   367,969   $ 1,629,384   1,392,207  
 
EBITDA
Barnes & Noble Retail $ 44,134 42,412 $ 248,512 336,894
Barnes & Noble College (9,320 ) (17,989 ) 119,441 24,939
Barnes & Noble.com   (57,155 ) (29,499 )   (204,565 ) (80,813 )
Total $ (22,341 ) (5,076 ) $ 163,388   281,020  
 
Net Income (Loss)
EBITDA $ (22,341 ) (5,076 ) $ 163,388 281,020
Depreciation and Amortization (57,956 ) (56,683 ) (228,647 ) (207,774 )
Interest Expense, net (17,657 ) (10,139 ) (57,350 ) (28,237 )
Income Taxes   38,538   39,846     48,652   (8,365 )
Total $ (59,416 ) (32,052 ) $ (73,957 ) 36,644  
 
 
Percentage of sales:
 
Gross Margin
Barnes & Noble Retail 31.5 % 31.3 % 30.6 % 32.5 %
Barnes & Noble College 24.3 % 22.5 % 21.6 % 21.3 %
Barnes & Noble.com   13.2 % 9.1 %   8.8 % 12.2 %
Total 27.5 % 27.5 % 25.6 % 28.9 %
 
Selling and Administrative Expenses
Barnes & Noble Retail 26.9 % 26.9 % 24.9 % 24.7 %
Barnes & Noble College 28.7 % 31.3 % 14.8 % 18.3 %
Barnes & Noble.com   39.5 % 30.1 %   32.6 % 26.4 %
Total 29.2 % 27.9 % 23.3 % 24.0 %
 

Contacts

Media:
Barnes & Noble, Inc.
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
mkeating@bn.com
or
Investors:
Barnes & Noble, Inc.
Joseph J. Lombardi, 212-633-3215
Chief Financial Officer
jlombardi@bn.com
or
Barnes & Noble, Inc.
Andy Milevoj, 212-633-3489
Director of Investor Relations
amilevoj@bn.com

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Contacts

Media:
Barnes & Noble, Inc.
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
mkeating@bn.com
or
Investors:
Barnes & Noble, Inc.
Joseph J. Lombardi, 212-633-3215
Chief Financial Officer
jlombardi@bn.com
or
Barnes & Noble, Inc.
Andy Milevoj, 212-633-3489
Director of Investor Relations
amilevoj@bn.com