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Barnes & Noble Reports Slight Sales Increase, Profits Decline

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December 1-15, 2004 Edition

Barnes & Noble

Reports Slight Sales

Increase, Profits Decline

New York, NY/ 11/15/04—Barnes & Noble, Inc. reported overall book division sales rose 1.7% to $1.04 billion for the third quarter ending October 30. But operating profits declined from $3 million to $1 million for the current reporting period. Bookstore sales within the book segment increased 2.6% to $950 million, and the company’s online sales for Barnes & Noble.com dropped 8% to $91.8 million.

Superstore sales were $894.9 million for the quarter, a 4% increase over the year-ago period. Third quarter comparable store sales increased 0.9%. The company opened nine new Barnes & Noble stores and closed three locations ending the quarter with 663 stores.

“We are encouraged that we were able to achieve our sales goal for the third quarter in light of the challenging sales comparisons from last year,” said Steve Riggio, chief executive officer of Barnes & Noble, Inc. “Sales of DVD, juvenile and café products were especially encouraging while sales of bestsellers were soft owing to the difficult comparisons against last year’s strong sales of bestselling books.”

Riggio told investors in a conference call November 15 that he was cautious about the outlook for the holiday season, and that it will be tough to perform ahead of last year’s fourth quarter.

Meanwhile, Barnes & Noble’s publishing unit is performing slightly ahead of plan. Sterling Publishing recorded flat outside sales (other than those to B&N), but Sterling’ now has about 30,000 outside customers.

Riggio also said Barnes & Noble plans to “significantly” increase the amount of self-published product it sells in its brick and mortar stores. The company will open 30 to 40 new stores during the next several years.

Dalton sales, which comprise approximately 3% of total bookstore sales, were $35.9 million for the quarter, a decrease of (19%) over the prior year, due primarily to store closings. The company closed seven stores ending the quarter with 176 stores. Third quarter comparable store sales decreased (3.3)%.

GAMESTOP SPIN-OFF

The company also noted that Friday, November 12, 2004 was the distribution date for the spin-off of GameStop, the nation’s largest video-game and entertainment software specialty retailer. Today is the first day that Barnes & Noble and GameStop (NYSE: GME and GME.B) will trade only as separate public companies.

Barnes & Noble, Inc. will report holiday sales on January 6, 2005.

ABOUT BARNES & NOBLE, INC.

Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller and a Fortune 500 company, operates 839 bookstores in 50 states. For the third year in a row, the company is the nation’s top retail brand for quality, according to the EquiTrend® Brand Study by Harris Interactive®. Barnes & Noble conducts its online business through Barnes & Noble.com ( www.bn.com), one of the Web’s largest e-commerce sites and the number-one brand among e-commerce companies, according to the latest EquiTrend survey. In addition to its retail operations, Barnes & Noble is one of the largest book publishers in the world. Its subsidiary, Sterling Publishing, publishes over 1,300 new titles a year and has an active list of more than 6,000 titles.