April 1-15, 2004 Edition

B&N to Merge Warehouses,

Boosts Sales, Expands Publishing

Unit via Direct Author Solicitation

NEW YORK, NY/03/18/04—Barnes & Noble has told analysts it will merge five New Jersey warehouses into a single facility at a cost of about $80 million. Target date for completion of a new facility is late 2005 or early 2006. The company also will close 12 stores, and as many as 40 Dalton mall stores, but will open about 35 superstores this year. Barnes & Noble is also making strong inroads into the publishing business, partly as a result of coaxing authors away from small publishing houses.

CEO Steve Riggio, in reviewing 2003 with analysts, said total bookstore revenues increased 7.8 percent to $4.22 billion, and operating income rose 15 percent to $233 million. Hardcover bestseller sales led the gains followed by DVD and magazine sales. B&N’s self-publishing operation, which does not include revenue from Sterling, soared into the double digits to substantially help operating margins.

The publishing unit plans to generate 10 percent of the company’s overall sales by the end of 2005, and will be more than half way to that goal at the end of 2004. Some reports have surfaced that Barnes & Noble is aggressively trying to persuade authors of successful backlist titles at small and medium-sized publishers to leave the smaller houses in favor of publishing through B&N.

For the full year, B&N superstore sales increased a modest 2 percent after gains of 5 to 7 percent in compstore sales in the first quarter. Sales are expected the decrease during the second half of the year partially due to the Olympics and the presidential election.