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Contact: Mary Ellen Keating, Senior Vice President
Corporate Communications, Barnes & Noble, Inc.                                  
(212) 633-3323
mkeating@bn.com
05/18/2004
BARNES & NOBLE ANNOUNCES FIRST QUARTER RESULTS

Comparable Store Sales Increase 9.4%
EPS Exceeds Estimates

New York, NY (May 18, 2004)—Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported sales and earnings for the first quarter ended May 1, 2004.

FIRST QUARTER RESULTS

Barnes & Noble store sales were $910.2 million for the quarter, an increase of 13% over the prior year.  First quarter comparable store sales increased 9.4%. The company opened nine new Barnes & Noble stores and closed three locations ending the quarter with 653 stores.

B. Dalton sales, which comprise approximately 4% of total bookstore sales, were $39.7 million for the quarter, a decrease of (13%) over the prior year, due primarily to store closings.  The company closed seven stores ending the quarter with 188 stores.  First quarter comparable store sales increased 6.0%. 

Earnings for the bookstore business, including publishing, were $0.21 per share in the first quarter versus a loss of ($0.05) per share in the prior year.

On April 27, 2004, Barnes & Noble.com reported a first quarter net loss of ($9.8) million, an improvement of 26% from the year-ago period. The company’s share of net losses for Barnes & Noble.com, after taxes, was ($6.8) million or ($0.10) per share for the quarter.

GameStop, the nation’s largest video-game and entertainment-software specialty retailer, today reported sales of $371.7 million for the quarter, an increase of 16% over the prior year period.  First quarter comparable store sales decreased (1.8)%. The company’s share of net earnings was $4.0 million or $0.06 per share for the quarter.

Consolidated net earnings for the first quarter was $12.5 million, or $0.17 per share, versus a loss of ($2.0) million, or ($0.03) per share, in the prior year. 

SECOND QUARTER GUIDANCE

For the second quarter, the company expects comparable store sales at Barnes & Noble stores to decrease between (2%) and (3%).  Full-year comparable store sales are expected to increase approximately 2%.

“The healthy gains in our first quarter comparable store sales were driven by an easy comparison to 2003 and from the extraordinary sales of hard cover books, particularly books on politics and the war in Iraq,” said Steve Riggio, Chief Executive Officer of Barnes & Noble, Inc.   “Although the second quarter comparable store sales comparison will be difficult due to the June release of Harry Potter last year, we expect that the impact on earnings will be minimal due to the low margins associated with the heavily discounted title.”

For the second quarter, Barnes & Noble.com expects net sales to range between $85 million and $95 million.  On May 3, 2004, Barnes & Noble.com filed a definitive proxy statement with the Securities and Exchange Commission regarding the proposed merger with a subsidiary of Barnes & Noble, Inc.  Upon completion of the merger, Barnes & Noble.com will become a wholly owned subsidiary of Barnes & Noble, Inc.  Barnes & Noble, Inc. expects to complete the acquisition of Barnes & Noble.com on or about May 27, 2004.

For the second quarter, GameStop expects comparable store sales to range from (1.0%) to (3.0%).

The following tables present EPS guidance for the second quarter and the full year.  EPS guidance for GameStop is based on the company’s approximate 63% ownership interest.

SECOND QUARTER EPS 2004 Guidance(a) 2003
Low High Pro forma (b)
Barnes & Noble Bookstores  $  0.17  $  0.19  $           0.19
Barnes & Noble.com    (0.11)     (0.09)              (0.13)
   Total Book Operating Segment      0.06      0.10               0.06
   Total Video Game Operating Segment       0.06      0.07               0.06
   Consolidated  $  0.12  $  0.17  $           0.12
FULL YEAR EPS 2004 Guidance(c) 2003
Low High Pro forma (b)
Barnes & Noble Bookstores (d)  $  1.88  $  1.90  $           1.75
Barnes & Noble.com    (0.21)     (0.18)              (0.35)
   Total Book Operating Segment (d)      1.67      1.72               1.40
   Total Video Game Operating Segment       0.52      0.54               0.50
   Consolidated (d)  $  2.19  $  2.26  $           1.90
(a) Based on a weighted average share count of approximately 71 million.
(b) Pro forma as if the company consolidated 100% of Barnes & Noble.com for the full year.
(c) Based on a weighted average share count of approximately 80 million.
(d) Includes the impact of $10.2 million interest addback on the convertible notes.

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 1:00 P.M. ET on Tuesday, May 18, 2004, and is accessible at www.barnesandnobleinc.com/financials, where it will be archived until June 25, 2004. The call will also be archived at www.fulldisclosure.com for one year.

Barnes & Noble, Inc. will report second quarter earnings on or about August 19, 2004.
About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller and a Fortune 500 company, operates 840 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 over 6,000 titles.

General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company's corporate Web site: http://www.barnesandnobleinc.com.

SAFE HARBOR

This press release contains "forward-looking statements." Barnes & Noble is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, general economic and market conditions, decreased consumer demand for the company's products, possible disruptions in the company's computer or telephone systems, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the company's online and other initiatives, the successful integration of acquired businesses, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, product shortages, and other factors which may be outside of the company's control. Please refer to the company's annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially.