New York, NY (November 16, 2006)—Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported preliminary financial results for the third quarter ended October 28, 2006. The company also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per share for stockholders of record at the close of business on December 8, 2006, payable on December 29, 2006.
Sales for the third quarter increased 3% to $1.1 billion. Barnes & Noble store sales increased 4% to $972.1 million, with comparable store sales increasing 2.0% for the quarter. B. Dalton sales were $20.5 million for the quarter, a 28% decrease due to store closings and a 5.0% comparable store sales decline. Barnes & Noble.com sales were $95.8 million for the quarter, a 0.5% comparable sales decline compared to the prior year period.
Bestselling titles during the quarter included Dianne Setterfield’s The Thirteenth Tale, Mitch Albom’s For One More Day, Barack Obama’s The Audacity of Hope, Lemony Snicket’s The End and John Grisham’s The Innocent Man.
Third quarter preliminary net losses were $2.8 million or $0.04 per share, in-line with company guidance of a loss of $0.04 to $0.08 per share. Third quarter results include a $0.03 per share impact due to stock compensation expense as 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.
As discussed below in more detail, the company will not be in a position to finalize its financial results and the related financial statements until the special committee of its Board of Directors has completed its internal review of the company’s historical option grant practices with the assistance of independent legal counsel, and the company is able to determine what, if any, impact the results of that investigation will have on its financial statements.
GUIDANCE
For the fourth quarter, the company expects comparable store sales at Barnes & Noble stores to range from flat to an increase in the low single-digits. Based on year-to-date results and current trends, the company now expects full year comparable store sales to range from flat to a slight increase over last year.
Barnes & Noble, Inc.’s fourth quarter earnings per share is expected to be in a range of $1.86 to $1.96. The company continues to expect full year earnings per share to be in a range of $2.20 to $2.30. Incorporated in the company’s fourth quarter and full year guidance are stock compensation expenses of $0.03 per share and a $0.14 per share, respectively, due to the adoption of SFAS 123(R) noted above.
As of October 28, 2006, the company operated 692 Barnes & Noble stores and 109 B. Dalton stores. During the third quarter, 11 Barnes & Noble stores were opened and six were closed. Three B. Dalton stores were closed during the quarter.
REVIEW OF STOCK OPTION PRACTICES
As previously announced, a special committee of Barnes & Noble’s Board of Directors is conducting an internal review of the company’s historical stock option grant practices. The committee, which has retained independent legal counsel, is working to complete its review of the company’s historical stock option grant practices in a timely manner.
At this time, the committee and independent legal counsel have not finished their work and have not reached any conclusions. Accordingly, the company has not yet determined whether it will be required to record additional non-cash stock based compensation expense related to stock option grants, and the preliminary results, related financial statements and guidance set forth above do not include any such additional charges and are subject to adjustment based on the results of the internal review.
Given these circumstances, the company will not be in a position to file its Quarterly Report on Form 10-Q for the quarter ended October 28, 2006 in a timely manner. The company plans to become current in its periodic reports required under the Securities Exchange Act of 1934, as amended, as soon as practicable following the completion of the committee’s review. Additionally, the company will not purchase shares under its stock repurchase program until it completes all required filings.
A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 11:00 A.M. ET on Thursday, November 16, 2006, 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 holiday sales on or about January 4, 2007.
FINANCIAL TABLES
Here you can download financial tables related to the sales and earnings for the second quarter ended October 28, 2006.
Consolidated Statements of Operations (13KB)
Consolidated Balance Sheets (13KB)
To read the tables, you will need Adobe Reader, available at no charge from Adobe. Click here to download Adobe Reader and follow the step-by-step instructions.
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