August 19, 1999
Barnes & Noble Comparable Store Sales Increase 6.6 Percent in Second
Quarter
Barnes & Noble Reports Consolidated EPS of $0.33 For Second Quarter
Compared with an $0.08 Loss for Prior Year
Barnes & Noble Stores Now Connected To Vast Online Inventory
New York, NY (August 19, 1999) -- Barnes & Noble, Inc. (NYSE: BKS), the
nation's largest bookseller, today reported sales of $727.2 million for the
second quarter ended July 31, 1999, up 9.8 percent from $662.5 million last
year. Barnes & Noble "super" store sales were $633.5 million, up 13.7
percent from $557.1 million in the second quarter of 1998, and accounted
for 87 percent of total sales compared with 84 percent for the same period
last year.
Barnes & Noble "super" store comparable sales increased an industry-leading
6.6 percent, while B. Dalton comparable store sales were down (0.5)
percent. Sales were strong across many categories, in particular fiction
(led by Thomas Harris' Hannibal), political science (led by Clinton-related
books such as George Stephanopoulos' All Too Human, Michael Isikoff's
Uncovering Clinton and others), religion (Dalai Lama's The Art of
Happiness), children's books (the "Harry Potter" books), gift books, music
and cafes.
As previously announced, sales for barnesandnoble.com increased by 243
percent from the second quarter 1998 (ended June 30) to $39.1 million.
Cumulative customer accounts increased by more than 506,000 during the
second quarter, to over 2.2 million as of June 30, 1999.
"We are extremely pleased with our second quarter results," said Leonard
Riggio, chairman and chief executive officer of Barnes & Noble, Inc. "Our
comparable store sales are strong and continue to lead the industry. The
success of our multi-channel strategy is clearly reflected in the strong
performances of our retail and online businesses. We are providing our
customers with any title and at any location they choose, online or in
store, while we continue to strengthen our franchise."
Consolidated net earnings for the quarter were $23.5 million, or $0.33 per
share, as compared with a consolidated net loss of ($5.7) million or
($0.08) per share for the same period last year. Earnings before taxes from
the company's retail business excluding non-recurring items increased 16.1
percent to $15.5 million or $0.13 per share after tax. Consolidated net
earnings for the quarter consisted of net earnings of $0.13 per share from
the retail business, a loss of ($0.05) per share from the company's 40
percent investment in barnesandnoble.com, and a net non-recurring gain of
$0.25 per share (see below).
The company's retail cash flow for the past twelve months (as measured by
EBITDA) increased 9.9 percent to $289 million from $263 million during the
prior year period. In addition, the company generated free cash flow of
$126 million over the past twelve months. Increasing cash flow and free
cash flow led to improving leverage as total debt to retail EBITDA for the
twelve months ended July 31, 1999 was 1.20, down from 1.50 for the
comparable prior year period. In addition, total debt was down 12.1 percent
while our sales were up 9.8 percent quarter over quarter.
"The completion of the rollout of BookMaster, our in-store system, marks
another milestone," said Alan Kahn, chief operating officer of Barnes &
Noble, Inc. "With this rollout, we have brought Internet technology into
our stores, connecting over 500 Barnes & Noble stores to the complete
inventory of our Web site. Our store customers now have access to the same
number of titles as our online customers ready for immediate delivery to
their home, office or to the store. With the BookMaster system, we can do
all this in the same time frame as our Internet competitors. As a result,
customer orders are up significantly on a year-to-date basis."
The company recorded a second quarter gain of $31 million pretax or $0.25
per share after tax comprised of the following non-recurring items:
* a $25 million pretax gain ($0.20 per share after tax) from the receipt of
$25 million from Bertelsmann as a result of the barnesandnoble.com initial
public offering (IPO);
* an $11 million pretax gain ($0.09 per share after tax) resulting from the
partial sale of the company's investment in Chapters Inc., Canada's largest
bookseller; and
* a pretax charge of $5 million ($0.04 per share after tax) associated with
the write-off of certain expenses of the company in connection with its
termination of the Ingram Book Group acquisition.
As of July 31, 1999, the company operated 521 Barnes & Noble stores and 448
B. Dalton stores. During the second quarter, nine Barnes & Noble stores
were opened and nine were closed. B. Dalton closed 18 stores in the second
quarter.
About Barnes & Noble, Inc.
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
exclusive bookseller on America Online (Keyword: bn). Barnes & Noble also
publishes books under its own imprint for exclusive sale through its retail
stores, mail-order catalogs, and Web site.
About barnesandnoble.com
Since launching its online business in May 1997, barnesandnoble.com
(Nasdaq: BNBN) quickly has become one of the world's largest Web sites and
the fourth largest E-commerce site, according to Media Metrix. Focused
largely on the sale of books, music and related products, the company has
capitalized on the recognized brand value of the Barnes & Noble name to
become the second-largest, and one of the fastest growing, online
distributors of books.
Customers can choose from millions of new and out-of-print titles and enjoy
a variety of related content such as author chats, book synopses and reader
reviews. The site also offers thousands of bargain books discounted up to
91 percent, the most popular software and magazine titles, music and gift
items for every occasion. barnesandnoble.com recently launched its music
store which includes the first online classical music superstore. With
access to Barnes & Noble's more than 750,000 in-stock titles,
barnesandnoble.com has the largest standing inventory of any online
bookseller ready for immediate delivery. The URL, bn.com, makes
the site easy to find, and its Express LaneSM single-click ordering process
ensures fast and convenient purchasing.
The barnesandnoble.com affiliate network has more than 160,000 members and
the company maintains strategic alliances with major Web portals and
content sites, such as AOL, Lycos and MSN. The company is also a leader in
business-to-business E-commerce with its unique Business Solutions program.
SAFE HARBOR
This release may contain forward-looking statements regarding expectations
of the company. These statements are based on currently available
information and represent the beliefs of the management of the company. The
future events which are the subject of such statements are subject to
certain risks, including those set forth in the company's annual and
quarterly reports on file with the Securities and Exchange Commission.
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(SEE ATTACHED TABLES)
General financial information on Barnes & Noble, Inc. can be obtained via
the Internet by visiting the company's investor relations Web site:
shareholder.com.
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