MAIN NEWS HEADLINES
September 1-15, 2004 Edition
Barnes & Noble Reports
Slight Sales Increase
For Second Quarter
New York, NY/08/19/04Barnes & Noble, Inc. (NYSE: BKS) has reported a 5 % increase in sales for the second quarter ended July 31, 2004, over the previous year.
Store sales were $961.3 million for the quarter. Second quarter comparable store sales increased 1.4%. The company opened nine new Barnes & Noble stores and closed five locations ending the quarter with 657 stores.
B. Dalton sales, which comprise approximately 4% of total bookstore sales, were $39.9 million for the quarter, a decrease of (22%) over the prior year, due primarily to store closings. The company closed five stores ending the quarter with 183 stores. Second quarter comparable store sales decreased (6.8)%.
On June 28, 2004, Barnes & Noble announced that it completed the redemption of its $300 million 5.25% convertible subordinated notes due 2009. The unamortized portion of the deferred financing fees from the issuance of the notes and redemption premium resulted in a charge of $14.6 million, or $0.12 per share, during the second quarter. Earnings for the bookstore business were $0.16 per share in the second quarter. Excluding the one-time charge, earnings for the bookstore business were $0.28 per share, versus guidance of $0.17 to $0.19 per share. Bookstore earnings were $0.19 per share in the year-ago period.
We are pleased at having achieved positive comparable store sales growth in the second quarter given the difficult comparisons to last years sales, which were driven by the extraordinary sales of Harry Potter & the Order of the Phoenix and the attendant traffic it generated, said Steve Riggio, chief executive officer of Barnes & Noble, Inc. We attribute the buoyancy in book sales to the release of a few titles that received major media coverage, most notably President Clintons memoir, My Life. The former presidents book became the fastest selling non-fiction book in our history, with sales of over 250,000 copies.
Barnes & Noble, Inc. completed its previously announced merger of Barnes & Noble.com on May 27, 2004. Barnes & Noble.coms second quarter sales decreased 6% to $84.5 million, resulting in a net loss of ($7.6) million, or ($0.11) per share, versus guidance of ($0.09) to ($0.11) per share. In the year-ago period, net loss was ($0.12) per share on a pro-forma basis, as if Barnes & Noble.com was 100% owned in the prior year.
On August 17, 2004, GameStop, the nations largest video-game and entertainment-software specialty retailer, reported sales of $345.6 million for the quarter, an increase of 13% over the prior year period. Second quarter comparable store sales decreased (2.4)%. The companys share of net earnings was $4.6 million, or $0.07 per share, for the quarter, versus guidance of $0.06 to $0.07 per share. The companys share of net earnings was $0.06 per share in the year-ago period. GameStop opened 77 stores and closed four, ending the quarter with 1,676 stores.
Consolidated GAAP net earnings for the second quarter was $8.9 million, or $0.12 per share, versus $13.7 million, or $0.20 per share, in the prior year. Consolidated net earnings excluding the one-time charge was $17.6 million, or $0.24 per share, versus guidance of $0.12 to $0.17 per share. In the year-ago period, consolidated net earnings was $0.13 per share on a pro-forma basis, as if Barnes & Noble.com was 100% owned in the prior year.
GUIDANCE
For the third and fourth quarters, the company expects comparable store sales at Barnes & Noble stores to increase between 1% and 2%. Full year comparable store sales are expected to increase approximately 3%.
For the third quarter, Barnes & Noble.com expects net sales to range between $85 million and $95 million, and GameStop expects comparable store sales to range from 4% to 6%.
Consolidated earnings per share guidance, excluding the debt redemption charge, for the full year is now projected to be $2.34 to $2.42, representing pro-forma growth of 23% to 27% over 2003. Previous full year earnings per share guidance was $2.19 to $2.26. The following tables present earnings per share guidance for the third quarter, fourth quarter and the full year. Earnings per share guidance for GameStop is based on the companys approximate 63% ownership interest.
