Barnes and Noble Results Show Huge eBook Sales Increase

June 28, 2010
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June 28 – July 4, 2010 Edition Barnes and Noble Results Show Huge eBook Sales Increase

NEW YORK, NY/AUTHORLINK NEWS/JUNE 29, 2010—Barnes and Noble late yesterday reported total sales and earnings for its fiscal 2010 fourth quarter and full year ended May 1, 2010. Sales for the fourth quarter were $1.3 billion, a 19% increase from the thirteen weeks ended May 2, 2009.

Sales for the online site, Barnes & Noble.com increased 51% to $141 million for the quarter, as compared to the period one year ago. But Barnes & Noble store sales decreased 3% to $962 million, with comparable store sales decreasing 3.1% for the quarter, in-line with the company’s expectations of a comparable store sales decline between 2% and 4%. Total store sales for 2010 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%.

While sales rose, the company reported a fourth quarter consolidated net loss of $32 million, or $0.58 per share.

In fiscal 2011, Barnes & Noble expects its consolidated (overall) sales to increase 20% to 25%, apparently boosted by e-book sales. Comparable sales for the company’s web site, Barnes & Noble.com, are expected to increase by approximately 75% to $1 billion, reflecting the actual retail selling price for eBooks sold under the agency model rather than solely the commission received. Meanwhile, Barnes & Noble comparable store sales are expected to remain flat or to increase no more than 3%. College comparable store sales also are expected to be flat.

“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., in reporting the results. “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 NOOK(TM), 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.”

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.

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

A webcast of the company’s investor conference covering the financial results and long-term strategies, was held Tuesday, June 29, 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.

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.

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