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Contact: Mary Ellen Keating, Senior Vice President
Corporate Communications, Barnes & Noble, Inc.                                  
(212) 633-3323
mkeating@bn.com

or

Investor Contact:
Joseph J. Lombardi, Chief Financial Officer
Barnes & Noble, Inc.
(212) 633-3215
jlombardi@bn.com

11/17/2005

BARNES & NOBLE REPORTS THIRD QUARTER RESULTS

Exceeds Earnings Per Share Guidance
Increases Full Year Guidance

New York, NY (November 17, 2005)—Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported sales and earnings for the third quarter ended October 29, 2005. 

Sales for the third quarter were $1,081.8 million, an increase of 4% from $1,042.3 million a year ago.  Sales at Barnes & Noble stores were $930.5 million, increasing 4% over the prior year.  Comparable store sales at Barnes & Noble were 1.5% for the quarter, in line with company guidance for a low-single digit increase.  The company estimates comparable store sales were negatively impacted by 0.5% due to the effects from the hurricanes.  Sales at B. Dalton stores were $28.4 million, a 21% decrease over the prior year, due primarily to store closings.  Comparable store sales at B. Dalton stores declined 1.6%.  Sales at Barnes & Noble.com increased 8% over the prior year to $99.4 million.

Net earnings for the third quarter were $0.00 per share and exceeded guidance of ($0.01) to ($0.04) per share.  Third quarter results included costs of $2 million, or $0.03 per share, associated with the previously announced redundancy costs for the new distribution center.  Excluding these costs, net earnings improved $0.03 per share as compared to results from continuing operations a year ago.

“Third quarter sales met expectations, benefiting from a strong hardcover release schedule in October,” said Steve Riggio, chief executive officer of Barnes & Noble, Inc.  “If our sales trend continues, we are optimistic that the company will be able to deliver its fourth quarter results as planned.”

During the third quarter, the company paid its first ever cash dividend of $0.15 per share, for a total of approximately $10.3 million.  The company acquired approximately 2.8 million shares for $105 million and approximately 7.3 million shares for $269 million under its share repurchase programs in the third quarter and year-to-date, respectively.

GUIDANCE

For the fourth quarter, the company expects comparable store sales at Barnes & Noble stores to be in the low-single digits.  For the full year, the company expects comparable store sales to increase between 2% and 3%. 

In the fourth quarter, the company expects earnings per share of $1.72 to $1.76, a 13% to 16% increase as compared to earnings per share from continuing operations of $1.52 in the prior year.  Guidance for the fourth quarter includes redundancy costs of approximately $2 million, or  $0.03 per share, associated with the new distribution center, and further costs are expected to continue through 2006 as the transition program is completed. 

For the full year, the company is increasing its earnings per share guidance to a range of $1.99 to $2.03, up $0.05 per share from previous guidance of $1.94 to $1.98.  This increase in guidance reflects year-to-date net earnings exceeding guidance by approximately $1 million, as well as earnings per share accretion resulting from the reduced share count associated with the company’s share repurchase activity.

The revised 2005 guidance reflects a 12% to 15% increase in earnings per share from continuing operations from $1.79 in 2004, excluding debt redemption fees of $0.11 and $0.02 per share in 2004 and 2005, respectively.

The company’s full year guidance includes the previously announced charges of $0.02 for the write-off of deferred financing fees resulting from the replacement of the company’s credit facility and the elimination of the term loan, and $0.06 in legal settlement costs, both of which occurred in the second quarter.  In addition, the full year guidance also includes $0.08 of previously announced redundancy costs in association with our new distribution center.

The fully diluted weighted average share count used in the computation of earnings per share for each of the periods in 2005 are as follows:

 

 

Fully diluted weighted

 

 

average shares

First quarter (actual)

 

74,400,000

Second quarter (actual)

 

73,087,000

Third quarter (actual)

 

71,257,000

Fourth quarter (forecast)

 

69,600,000

Full year (forecast)

 

72,100,000

As of October 29, 2005, the company operated 683 Barnes & Noble stores and 141 B. Dalton stores.  During the third quarter, 13 Barnes & Noble stores were opened and three were closed.  Five 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, November 17, 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 holiday sales on or about January 5, 2006.

FINANCIAL TABLES

Here you can download financial tables related to the sales and earnings for the first quarter ended October 29, 2005. 

Consolidated Statements of Operations (13KB)
Consolidated Balance Sheets (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.



About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller and a Fortune 500 company, operates 824 bookstores in 50 states. For the fourth 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 online bookseller for quality among e-commerce companies, according to the latest EquiTrend survey.

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, the successful and timely completion and integration of the company’s new New Jersey distribution center, 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.