New York, NY (August 18, 2005)—Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported sales and earnings for the second quarter ended July 30, 2005. In addition, the company announced that its Board of Directors has authorized the initiation of a quarterly cash dividend of $0.15 per share for shareholders of record at the close of business on September 9, 2005, payable on September 30, 2005.
Sales for the second quarter were $1,170.8 million, an increase of 6% from $1,100.3 million a year ago. Sales at Barnes & Noble stores were $1,028.9 million, increasing 7% over the prior year. Comparable store sales at Barnes & Noble were 4.3% for the quarter, in line with company guidance for a mid-single digit increase. Sales at Barnes & Noble.com increased 14% over the prior year to $96.3 million. Sales at B. Dalton stores were $31.6 million, a decrease of (21%) over the prior year, due primarily to store closings offset by a 0.2% comparable store sales increase.
Net earnings for the quarter were $13.5 million, or $0.18 per share, including a previously announced non-cash after-tax charge of $1.1 million, or $0.02 per share, to write off unamortized deferred financing fees resulting from the replacement of the company’s $400 million credit facility with a new $850 million credit facility, and the pre-payment and cancellation of the company’s $245 million term loan. Excluding this charge, earnings were $0.20 per share in line with guidance of $0.19 to $0.21.
Second quarter net earnings per share increased $0.06 to $0.18 versus $0.12 last year, but were impacted by the following: the write off noted above, the 2004 charge associated with calling the convertible notes, and the 2004 spin-off of GameStop. Earnings per share from continuing operations, excluding charges, increased 18% to $0.20 from $0.17 last year, as presented in Table A.
Included in second quarter selling and administrative expenses are pretax charges of approximately $6.9 million for legal costs and increased accruals for anticipated settlements of a previously reported class action suit on employee wages and other litigation. The company believes the resulting accruals will be sufficient to satisfy outcomes of pending litigation.
“We are pleased with our second quarter results,” said Steve Riggio, chief executive officer of Barnes & Noble, Inc. “The excitement generated by Harry Potter and the Half-Blood Prince boosted our traffic both in stores and online. Our business is on track as we prepare for the all important second half of the year.”
SHARE REPURCHASE ACTIVITY
The company acquired approximately $90 million and $164 million of shares under its share repurchase programs in the second quarter and year-to-date, respectively.
“Our strong commitment to continuing to create shareholder value is evidenced by the declaration of our first ever cash dividend. This dividend, supported by the company’s excellent free cash flow and strong balance sheet, reflects our confidence in the future growth of Barnes & Noble,” said Leonard Riggio, chairman of Barnes & Noble, Inc.
For the third quarter, the company expects comparable store sales at Barnes & Noble stores to be in the low-single digits. For the full year, the company continues to expect comparable store sales to increase approximately 3%.
In the third quarter, the company expects a net loss per share of ($0.01) to ($0.04) based on a basic share count of approximately 68.5 million, as compared to earnings per share from continuing operations of $0.00 in the prior year. Guidance for the third quarter includes incremental costs of approximately ($0.03) per share associated with the previously announced new distribution center that became operational in August.
For the full year, the company continues to expect earnings per share to be in a range of $1.94 to $1.98, based on a diluted share count of approximately 73.6 million.
As of July 30, 2005, the company operated 673 Barnes & Noble stores and 146 B. Dalton stores. During the second quarter, five Barnes & Noble stores were opened and three were closed. Four B. Dalton stores were closed during the quarter.
A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 11:00 A.M. ET on Thursday, August 18, 2005, 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 third quarter earnings on or about November 17, 2005.
Here you can download financial tables related to the sales and earnings for the first quarter ended July 30, 2005.
Consolidated Statements of Operations (13KB)
Consolidated Balance Sheets (14KB)
Second Quarter EPS Reconciliation - Table A (14KB)
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.