MAIN NEWS HEADLINES
March 29 – April 5, 2007 Edition
Barnes & Noble
Forecasts 07 Losses
Despite Growing Profits
New York, NY/3/22/07-Barnes & Noble, Inc. (NYSE: BKS), the worlds largest bookseller, March 22 reported sales and preliminary financial results for the fourth quarter and the full year ended February 3, 2007, which consisted of fourteen weeks and fifty-three weeks, respectively.
2006 RESULTS
As previously reported, Barnes & Noble store sales were $1,549 million for the quarter and $4,534 million for the full year. Excluding the impact of the extra week in this years fiscal calendar, Barnes & Noble store sales increased 2% for the quarter and the full year as compared to the same periods in fiscal 2005. Comparable store sales decreased 0.1% for the quarter and 0.3% for the year.
B. Dalton store sales were $36 million for the quarter and $102 million for the full year. Excluding the impact of the extra week in this years fiscal calendar, B. Dalton store sales decreased 30% for the quarter and 29% for the full year as compared to the same periods in fiscal 2005, primarily due to the closing of 20 stores since the fourth quarter of 2005. Comparable store sales decreased 7.5% for the quarter and 6.1% for the year.
Barnes & Noble.com sales were $164 million for the quarter and $433 million for the full year. Excluding the impact of the extra week in this years fiscal calendar, Barnes & Noble.com comparable sales increased 5.1% for the quarter and decreased 1.1% for the full year as compared to the same periods in fiscal 2005.
Consolidated sales were $1,878 million for the quarter and $5,261 million for the full year.
As previously announced, the company will close its Memphis, Tennessee, Internet distribution center in 2007, and as a result, the company incurred charges, net of tax benefits, of $2.2 million in 2006, or $0.03 per share, related to accelerated depreciation and severance associated with the close-down of the Memphis facility.
Preliminary net earnings increased 3% to $127.0 million, or $1.84 per share for the fourth quarter, and increased 3% to $150.8 million, or $2.18 per share, for the full year, in line with guidance updated on March 5, 2007. The company has adopted Statement of Financial Accounting Standards No. 123(R) (As Amended), Share-Based Payment (SFAS 123(R)), and began expensing stock options at the beginning of fiscal year 2006. Fourth quarter and full-year results include stock compensation expenses of $0.03 per share and $0.14 per share, respectively.
2007 GUIDANCE
The company expects first quarter comparable store sales at Barnes & Noble stores to be flat to slightly positive, and as previously announced, full-year comparable store sales are also expected to be flat to slightly positive.
Barnes & Noble, Inc.s first quarter loss is expected to be in a range of $(0.08) to $(0.12) per share. The first quarter loss will include charges, net of tax benefits, of $3.7 million, or $0.06 per share, related to the previously mentioned closing of its Internet distribution center. The first quarter loss will also include charges related to legal expenses in the companys review of its stock option practices, net of tax benefits, of between $3.0 million and $4.5 million, or $0.05 to $0.07 per share. Excluding these charges, first quarter earnings (loss) per share are expected to be in a range of $(0.01) to $0.05 per share.
As previously announced, Barnes & Noble, Inc.s full-year earnings are expected to be in a range of $1.49 to $1.67 per share. The full-year earnings include expected charges, net of tax benefits, of $4.9 million, or $0.07 per share, related to the closing of its Internet distribution center. The full-year earnings also include expected charges related to legal expenses in the companys review of its stock option practices, net of tax benefits, of between $4 million and $6 million, or $0.06 to $0.09 per share. Excluding these charges, full-year earnings per share are expected to be in a range of $1.65 to $1.80 per share.
The share count used in the computation of earnings per share is based on a basic weighted average share count of 65.1 million shares for the first quarter, and a fully diluted weighted average share count of 70.0 million shares for the full year.
As of February 3, 2007, the company operated 695 Barnes & Noble stores and 98 B. Dalton stores. During the fourth quarter, nine Barnes & Noble stores were opened and six were closed. Eleven B. Dalton stores were closed during the quarter.
REVIEW OF STOCK OPTION PRACTICES
The special committee of Barnes & Nobles Board of Directors and its independent legal counsel have not yet finished their review of the companys stock option practices. Accordingly, the company has not yet determined the amount of any additional non-cash stock-based compensation expense related to stock option grants that may be recorded, and the preliminary results and guidance set forth herein do not include any such additional charges and are subject to adjustment based on the results of the internal review.
A conference call with Barnes & Noble, Inc.s senior management was to be webcast on Thursday, March 22, 2007, and is accessible at www.barnesandnobleinc.com/webcasts. The call will also be archived at www.earnings.com for one year.
Barnes & Noble, Inc. will report first quarter earnings on or about May 24, 2007.