Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported sales and earnings for its fiscal 2010 fourth quarter and full year ended May 1, 2010.
FOURTH QUARTER RESULTS
Total sales for the fourth quarter were $1.3 billion, a 19% increase from the thirteen weeks ended May 2, 2009. Barnes & Noble.com sales increased 51% to $141 million for the quarter, as compared to the period one year ago. Barnes & Noble store sales decreased 3% to $962 million, with comparable store sales decreasing 3.1% for the quarter, in-line with guidance of a comparable store sales decline between 2% and 4%. In 2010, total sales include Barnes & Noble College Booksellers (“College”) sales of $205 million. College’s comparable store sales increased 2.9%, exceeding guidance of a decline of 1% to an increase of 1%.
For the fourth quarter, the company reported a consolidated net loss of $32 million, or $0.58 per share. Included in these results is a benefit of $0.25 per share resulting from the release of tax reserves pursuant to the completion of tax examinations. The results also include an after-tax benefit of $0.07 per share, resulting from a more favorable physical inventory shortage rate than previously forecasted. Excluding both of these benefits, the fourth quarter net loss was $0.89 per share. This loss was in-line with previously issued guidance of $0.85 to $1.15 per share.
FISCAL 2010 FULL-YEAR RESULTS
Total sales for the full year were $5.8 billion. Barnes & Noble.com sales increased 24% to $573 million for the year, as compared to the twelve month period ended May 2, 2009. Barnes & Noble store sales were $4.3 billion, with comparable store sales decreasing 4.8% for the year. Total fiscal year 2010 sales include post-acquisition College sales of $836 million, with comparable store sales decreasing 0.3% during that same period.
Consolidated net earnings were $36.7 million, or $0.63 per share. Excluding the tax benefits noted above, consolidated net earnings would have been $0.39 per share, as compared to guidance of $0.23 to $0.53 per share.
GUIDANCE
In fiscal 2011, Barnes & Noble expects its consolidated sales to increase 20% to 25%. Barnes & Noble.com comparable sales are expected to increase by approximately 75% to $1 billion. (Barnes & Noble.com comparable sales reflects the actual retail selling price for eBooks sold under the agency model rather than solely the commission received.) Barnes & Noble comparable store sales are expected to be in a range of flat to an increase of 3%. College comparable store sales are expected to be flat.
“We are pleased that in the fourth quarter each of our three channels of business have all gained significant share: physical bookstores, digital books and books sold online at bn.com. In fact, in just a brief 12 months since we launched the Barnes and Noble ebookstore, our share of the digital market already exceeds our share of the retail book market,” said William Lynch, chief executive officer of Barnes & Noble, Inc. “In light of the exciting digital opportunity before us, we are planning to redirect a significant portion of our financial resources towards investments in technology, sales and marketing. These investments will impact our bottom line in 2011, but we believe they will enable Barnes & Noble to capitalize on the significant mid-to-long-term growth opportunities presented by the digital markets.”
As a result of the planned increases in investment spending in the business, the company expects EBITDA to be in a range of $235 million to $275 million and earnings per share to be in a range of breakeven to a loss of $0.40 for fiscal 2011. In accordance with ASC 605-25 Revenue Recognition, Multiple Element Arrangements, the company is deferring certain eReader device revenue over a two year period. Excluding this deferral, fiscal 2011 net earnings (losses) per share are expected to be in a range of ($0.10) to $0.30.
“The explosive growth of digital books has created the most compelling opportunity in Barnes & Noble’s history,” said Leonard Riggio, chairman of Barnes & Noble, Inc. “We have found that Barnes & Noble Members, our best customers, have increased their combined physical and digital spend with us by 17 percent since purchasing a NOOKTM, and by a phenomenal 70 percent in total units. Based on our assessment of the future digital landscape, I am confident that we have the right strategy and management team to drive Barnes & Noble’s next phase of growth and development.”
For the company’s fiscal 2011 first quarter ending July 31, 2010, Barnes & Noble.com comparable sales are expected to increase 30% to 50%. Barnes & Noble comparable store sales are expected to be in a range of flat to an increase of 3%. College comparable store sales are expected to be flat. First quarter net loss per share is expected to be in a range of $0.85 to $1.15.
INVESTOR DAY WEBCAST
The company’s senior management will host an investor conference beginning at 9:00 AM ET on Tuesday, June 29, to discuss the company's financial results, business strategy and longer-term outlook. The webcast of this investor conference can be accessed on Barnes & Noble, Inc.'s corporate website at www.barnesandnobleinc.com/webcasts. The webcast will be archived and available for one year at www.earnings.com.
Barnes & Noble, Inc. will report fiscal 2011 first quarter results on or about August 24, 2010.
ABOUT BARNES & NOBLE, INC.
Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller and a Fortune 500 company, operates 720 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 637 college bookstores serving nearly 4 million students and faculty members at colleges and universities across the United States. Barnes & Noble is the nation’s top bookseller brand for the seventh year in a row, as determined by a combination of the brand’s performance on familiarity, quality, and purchase intent; the top bookseller in quality for the second year in a row and the number two retailer in trust, according to the EquiTrend® Brand Study by Harris Interactive®. 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 one million titles in its eBookstore (www.bn.com/ebooks). Barnes & Noble customers can buy and read eBooks on the widest range of platforms, including NOOK™ by Barnes & Noble, eBook Readers from partner companies, and hundreds of the most popular mobile and computing devices using free BN eReader software.
General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company’s corporate website: www.barnesandnobleinc.com.
NOOK™ is a trademark of Barnes & Noble, Inc.
Social Media Links: |
SAFE HARBOR
This press release contains “forward-looking statements.” Barnes & Noble is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company’s products, possible disruptions in the company’s computer systems, telephone systems or supply chain, possible risks associated with data privacy and information security, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the company’s online, digital and other initiatives, the performance and successful integration of acquired businesses, the success of the company’s strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, the results or effects of any governmental review of the company’s stock option practices, product and component shortages, and other factors which may be outside of the company’s control. Please refer to the company’s annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially. The company assumes no obligation to update or revise any forward-looking statements.
| 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 | ||||||||||||||
| May 1, 2010 | May 2, 2009 | May 1, 2010 | January 31, 2009 | ||||||||||||||
| Sales | $ | 1,319,446 | 1,105,152 | $ | 5,810,564 | 5,121,804 | |||||||||||
| Cost of sales and occupancy | 956,416 | 773,491 | 4,133,819 | 3,540,596 | |||||||||||||
| Gross profit | 363,030 | 331,661 | 1,676,745 | 1,581,208 | |||||||||||||
| Selling and administrative expenses | 367,969 | 286,554 | 1,392,207 | 1,251,524 | |||||||||||||
| Depreciation and amortization | 56,683 | 45,879 | 207,774 | 173,557 | |||||||||||||
| Pre-opening expenses | 137 | 2,472 | 3,518 | 12,796 | |||||||||||||
| Operating profit (loss) | (61,759 | ) | (3,244 | ) | 73,246 | 143,331 | |||||||||||
| Interest expense, net | 10,139 | 199 | 28,237 | 2,344 | |||||||||||||
| Income (loss) from continuing operations before taxes | (71,898 | ) | (3,443 | ) | 45,009 | 140,987 | |||||||||||
| Income taxes | (39,846 | ) | (1,374 | ) | 8,365 | 55,591 | |||||||||||
| Income (loss) from continuing operations (net of income tax) | (32,052 | ) | (2,069 | ) | 36,644 | 85,396 | |||||||||||
| Loss from discontinued operations (net of income tax) | - | (654 | ) | - | (9,506 | ) | |||||||||||
| Net income (loss) | (32,052 | ) | (2,723 | ) | 36,644 | 75,890 | |||||||||||
| Net loss attributable to noncontrolling interests | 14 | 30 | 32 | 30 | |||||||||||||
| Net income (loss) attributable to Barnes & Noble, Inc. | $ | (32,038 | ) | (2,693 | ) | $ | 36,676 | 75,920 | |||||||||
| Income (loss) attributable to Barnes & Noble, Inc. | |||||||||||||||||
| Income (loss) from continuing operations | $ | (32,052 | ) | (2,069 | ) | $ | 36,644 | 85,396 | |||||||||
| Less loss attributable to noncontrolling interests | 14 | 30 | 32 | 30 | |||||||||||||
| Net income (loss) from continuing operations attributable to Barnes & Noble, Inc. | $ | (32,038 | ) | (2,039 | ) | $ | 36,676 | 85,426 | |||||||||
| Basic income per common share: | |||||||||||||||||
| Income (loss) from continuing operations attributable to Barnes & Noble, Inc. | $ | (0.58 | ) | (0.04 | ) | $ | 0.64 | 1.50 | |||||||||
| Loss from discontinued operations attributable to Barnes & Noble, Inc. | - | (0.01 | ) | - | (0.17 | ) | |||||||||||
| Net income (loss) attributable to Barnes & Noble, Inc. | $ | (0.58 | ) | (0.05 | ) | $ | 0.64 | 1.33 | |||||||||
| Diluted income per common share: | |||||||||||||||||
| Income (loss) from continuing operations attributable to Barnes & Noble, Inc. | $ | (0.58 | ) | (0.04 | ) | $ | 0.63 | 1.46 | |||||||||
| Loss from discontinued operations attributable to Barnes & Noble, Inc. | - | (0.01 | ) | - | (0.17 | ) | |||||||||||
| Net income (loss) attributable to Barnes & Noble, Inc. | $ | (0.58 | ) | (0.05 | ) | $ | 0.63 | 1.29 | |||||||||
| Weighted average common shares outstanding | |||||||||||||||||
| Basic | 55,597 | 54,759 | 55,344 | 55,207 | |||||||||||||
| Diluted | 55,597 | 54,759 | 56,153 | 56,529 | |||||||||||||
| Dividends declared per common share | $ | 0.25 | 0.25 | $ | 1.00 | 0.90 | |||||||||||
| Percentage of sales: | |||||||||||||||||
| Sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
| Cost of sales and occupancy | 72.5 | % | 70.0 | % | 71.1 | % | 69.1 | % | |||||||||
| Gross profit | 27.5 | % | 30.0 | % | 28.9 | % | 30.9 | % | |||||||||
| Selling and administrative expenses | 27.9 | % | 25.9 | % | 24.0 | % | 24.4 | % | |||||||||
| Depreciation and amortization | 4.3 | % | 4.2 | % | 3.6 | % | 3.4 | % | |||||||||
| Pre-opening expenses | 0.0 | % | 0.2 | % | 0.1 | % | 0.2 | % | |||||||||
| Operating profit (loss) | -4.7 | % | -0.3 | % | 1.3 | % | 2.8 | % | |||||||||
| Interest expense, net | 0.8 | % | 0.0 | % | 0.5 | % | 0.0 | % | |||||||||
| Income (loss) from continuing operations before taxes | -5.4 | % | -0.3 | % | 0.8 | % | 2.8 | % | |||||||||
| Income taxes | -3.0 | % | -0.1 | % | 0.1 | % | 1.1 | % | |||||||||
| Income (loss) from continuing operations (net of income tax) | -2.4 | % | -0.2 | % | 0.6 | % | 1.7 | % | |||||||||
| BARNES & NOBLE, INC. AND SUBSIDIARIES | |||||||||
| Consolidated Balance Sheets | |||||||||
| (In thousands) | |||||||||
| May 1, 2010 | May 2, 2009 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 60,965 | 86,594 | ||||||
| Receivables, net | 106,576 | 70,721 | |||||||
| Merchandise inventories | 1,370,111 | 1,233,756 | |||||||
| Prepaid expenses and other current assets | 181,825 | 121,563 | |||||||
| Total current assets | 1,719,477 | 1,512,634 | |||||||
| Property and equipment: | |||||||||
| Land and land improvements | 8,618 | 9,298 | |||||||
| Buildings and leasehold improvements | 1,212,567 | 1,102,439 | |||||||
| Fixtures and equipment | 1,594,048 | 1,331,524 | |||||||
| 2,815,233 | 2,443,261 | ||||||||
| Less accumulated depreciation and amortization | 2,003,199 | 1,642,517 | |||||||
| Net property and equipment | 812,034 | 800,744 | |||||||
| Goodwill | 528,541 | 254,842 | |||||||
| Intangible assets, net | 580,962 | 82,691 | |||||||
| Other noncurrent assets | 64,672 | 13,368 | |||||||
| Total assets | $ | 3,705,686 | 2,664,279 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 868,976 | 698,315 | ||||||
| Accrued liabilities | 755,432 | 587,454 | |||||||
| Short-term note payable | 100,000 | - | |||||||
| Total current liabilities | 1,724,408 | 1,285,769 | |||||||
| Long-term debt | 260,400 | - | |||||||
| Deferred taxes | 311,607 | 79,369 | |||||||
| Other long-term liabilities | 505,903 | 387,318 | |||||||
| Shareholders' equity: | |||||||||
Common stock; $.001 par value; 300,000 shares | 89 | 88 | |||||||
| Additional paid-in capital | 1,286,215 | 1,274,454 | |||||||
| Accumulated other comprehensive loss | (13,212 | ) | (12,015 | ) | |||||
| Retained earnings | 681,082 | 697,042 | |||||||
| Treasury stock, at cost, 33,285 and 33,148 shares, respectively | (1,052,356 | ) | (1,049,328 | ) | |||||
| Total Barnes & Noble, Inc. shareholders' equity | 901,818 | 910,241 | |||||||
| Noncontrolling interest | 1,550 | 1,582 | |||||||
| Total shareholders' equity | 903,368 | 911,823 | |||||||
| Commitments and contingencies | - | - | |||||||
| Total liabilities and shareholders' equity | $ | 3,705,686 | 2,664,279 | ||||||
Contacts:
Media Contact:
Mary
Ellen Keating, Senior Vice President
Corporate Communications
212-633-3323
mkeating@bn.com
or
Investors:
Joseph
J. Lombardi, Chief Financial Officer
212-633-3215
jlombardi@bn.com
Andy
Milevoj, Director of Investor Relations
212-633-3489
amilevoj@bn.com
