Barnes & Noble Comparable 'Super' Store Sales Increased 2.3 Percent; Babbage's Comparable Store Sales Up 13.2 Percent.Business Editors NEW YORK--(BUSINESS WIRE)--May 24, 2001 Consolidated EPS for the First Quarter Exceeds Consensus Estimates Barnes & Noble, Inc. (NYSE:BKS), the nation's largest bookseller, today reported total retail bookstore sales of $807.9 million for the first quarter ended May 5, 2001, up 4.3 percent from $774.3 million last year. Barnes & Noble "super" store sales were $738.6 million, up 6.7 percent from $692.5 million in the first quarter 2000. Babbage's reported sales of $201.4 million for the first quarter, up 67.8 percent. Barnes & Noble comparable "super" store sales increased 2.3 percent for the first quarter, slightly below estimates, while Babbage's comparable store sales increased 13.2 percent, significantly above estimates. B. Dalton comparable store sales were down (1.8) percent. Barnes & Noble reported a consolidated pro-forma loss per share of $0.12, prior to an extraordinary item, for the first quarter, exceeding consensus estimates. Although the variance in sales for Barnes & Noble Booksellers resulted in lower operating earnings for the first quarter, a comprehensive program to reduce expenses will begin to take effect in the second quarter and continue throughout the year. Even at a reduced guidance of 2.5 to 3.5 percent for comparable "super" store sales for the balance of the year, this segment is projected to meet previously announced earnings targets. Babbage's better than forecasted comparable sales resulted from the momentum which is building in the video-game industry. Previously announced launches of major new platforms by Nintendo and Microsoft are expected to accelerate sales further in the second half of the year. While the leading edge of video-game sales is hardware, where lower margins are achieved, the trailing and more profitable edge is software, which has higher margins. The company expects significant increases in operating margins beginning in the fourth quarter and continuing into next year. As previously announced in April 2001, the company successfully settled a lawsuit brought by the American Booksellers Association and agreed to pay $2.4 million, a small portion of the plaintiff's legal fees. The settlement and the cost of litigation resulted in an extraordinary charge of $0.04 per share during the first quarter. Lower legal fees in subsequent quarters will offset the first-quarter charge. A conference call with Barnes & Noble, Inc.'s management will be simulcast on the Web at (www.streetfusion.com) beginning at 11 A.M. ET on Thursday, May 24, 2001, and is accessible at (http://www.barnesandnobleinc.com/financials), where it will be archived until June 24, 2001. About Barnes & Noble, Inc. Barnes & Noble, Inc. (NYSE: BKS) operates 568 Barnes & Noble and 335 B. Dalton bookstores, and, with its acquisition of Babbage's Etc. and Funco, Inc., is the nation's largest operator of video game and entertainment software stores. Barnes & Noble stores stock an authoritative selection of book titles and provide access to more than one million titles. They offer books from more than 50,000 publisher imprints with an emphasis on small, independent publishers and university presses. Barnes & Noble is one of the world's largest booksellers on the World Wide Web (http://www.bn.com), and the premiere bookseller on America Online's (Keyword: bn) proprietary network. Barnes & Noble.com has the largest standing inventory of any online bookseller. Barnes & Noble also publishes books under its own imprint for exclusive sale through its retail stores and Web site. General financial information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company's corporate Web site: http://www.barnesandnobleinc.com/financials. 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 or telephone systems, 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 and other initiatives, the successful integration of acquired businesses, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, product 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.
Barnes & Noble, Inc.
First Quarter Summary
($ in millions, except per share amounts)
13 weeks ended
---------------------------
May 5, 2001 April 29, 2000
----------- --------------
BARNES & NOBLE RETAIL OPERATIONS
BARNES & NOBLE BOOKSELLERS
(Retail Bookstores)
Sales $ 808 774
EBITDA 47 53
EPS 0.12 0.16
BABBAGE'S
(Video Game & Entertainment Software Stores)
Sales 201 120
EBITDA 2 4
EPS (0.10) (0.02)
RETAIL EPS 0.02 0.14
INVESTING ACTIVITIES
Share of pro forma net losses
of Barnes & Noble.com (1) (0.11) (0.10)
Share of net losses from other
investments (0.03) (0.04)
-------- --------
CONSOLIDATED PRO FORMA EPS BEFORE
EXTRAORDINARY ITEM (0.12) 0.00
EXTRAORDINARY ITEM
ABA legal and settlement cost (0.04) 0.00
-------- --------
CONSOLIDATED PRO FORMA EPS $ (0.16) 0.00
======== ========
CONSOLIDATED EPS, AS REPORTED $ (0.18) (0.06)
(1) Pro forma results are presented for informational purposes only
and are not prepared in accordance with generally accepted
accounting principles. Such results present the net loss of
barnesandnoble.com inc., excluding stock based compensation and
equity in net loss of equity investments including amortization
of intangibles.
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(thousands of dollars, except per share data)
(unaudited)
13 weeks ended
May 5, 2001 April 29, 2000
----------- --------------
Sales $ 1,009,637 894,256
Cost of sales and occupancy 750,586 654,167
----------- -----------
Gross profit 259,051 240,089
----------- -----------
Selling and administrative expenses 210,170 181,279
Depreciation and amortization 36,723 33,005
Pre-opening expenses 825 1,483
----------- -----------
Operating profit 11,333 24,322
Interest expense, net (11,277) (9,773)
Equity in net loss of Barnes & Noble.com (14,315) (17,598)
Other expense, net (5,385) (4,034)
----------- -----------
Loss before taxes (19,644) (7,083)
Income taxes (8,152) (2,939)
----------- -----------
Net loss $ (11,492) (4,144)
=========== ===========
Loss per common share:
Basic $ (0.18) (0.06)
Diluted $ (0.18) (0.06)
Weighted average common shares
outstanding
Basic 65,205,000 64,203,000
Diluted 65,205,000 64,203,000
Percentage of sales:
Sales 100.0% 100.0%
Cost of sales and occupancy 74.4% 73.2%
----------- -----------
Gross profit 25.6% 26.8%
----------- -----------
Selling and administrative expenses 20.8% 20.3%
Depreciation and amortization 3.6% 3.7%
Pre-opening expenses 0.1% 0.2%
----------- -----------
Operating profit 1.1% 2.7%
Interest expense, net -1.1% -1.1%
Equity in net loss of Barnes & Noble.com -1.4% -2.0%
Other expense, net -0.5% -0.5%
----------- -----------
Loss before taxes -1.9% -0.8%
Income taxes -0.8% -0.3%
----------- -----------
Net loss -1.1% -0.5%
=========== ===========
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(thousands of dollars, except per share data)
May 5, April 29, February 3,
2001 2000 2001
---------- ---------- ----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 47,670 18,947 26,003
Receivables, net 78,011 58,421 84,505
Merchandise inventories 1,255,573 1,162,097 1,238,618
Prepaid expenses and other
current assets 108,525 49,898 106,127
---------- ---------- ----------
Total current assets 1,489,779 1,289,363 1,455,253
---------- ---------- ----------
Property and equipment:
Land and land improvements 3,247 3,247 3,247
Buildings and leasehold
improvements 402,760 415,144 436,289
Fixtures and equipment 657,142 582,274 682,444
---------- ---------- ----------
1,063,149 1,000,665 1,121,980
Less accumulated depreciation
and amortization 518,238 447,335 555,760
---------- ---------- ----------
Net property and equipment 544,911 553,330 566,220
---------- ---------- ----------
Intangible assets, net 355,063 299,386 359,192
Investment in Barnes & Noble.com 122,280 222,933 136,595
Other noncurrent assets 46,044 62,354 40,216
---------- ---------- ----------
Total assets $2,558,077 2,427,366 2,557,476
========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 559,605 589,835 582,075
Accrued liabilities 259,856 221,132 353,000
---------- ---------- ----------
Total current liabilities 819,461 810,967 935,075
---------- ---------- ----------
Long-term debt 790,000 597,400 666,900
Deferred income taxes 72,894 121,249 74,289
Other long-term liabilities 102,907 90,484 103,535
Shareholders' equity:
Common stock; $.001 par value;
300,000,000 shares authorized;
70,995,594, 69,612,037 and
70,549,176 shares issued,
respectively 71 70 71
Additional paid-in capital 682,289 655,510 673,122
Accumulated other comprehensive
loss (8,411) (6,494) (5,874)
Retained earnings 216,243 275,557 227,735
Treasury stock, at cost,
5,504,700 shares (117,377) (117,377) (117,377)
---------- ---------- ----------
Total shareholders' equity 772,815 807,266 777,677
---------- ---------- ----------
Commitments and contingencies - - -
---------- ---------- ----------
Total liabilities and
shareholders' equity $2,558,077 2,427,366 2,557,476
========== ========== ==========
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