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

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

05/24/2007

Barnes & Noble Reports First Quarter Financial Results:

Exceeds Earnings Per Share Guidance

Declares Quarterly Dividend

New York, NY (May 24, 2007) — Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported sales and earnings for the first quarter ended May 5, 2007.  In addition, 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 June 8, 2007, payable on June 29, 2007.

Sales for the first quarter increased 3% to $1.1 billion. Barnes & Noble store sales increased 3.3% to $1.0 billion, with comparable store sales increasing 1.7% for the quarter.  Barnes & Noble.com sales were $93.8 million for the quarter, an 8.0% comparable sales increase compared to the prior year period.

Bestselling titles during the quarter included Rhonda Byrne’s The Secret, Chris Bohjalian’s The Double Bind, Mohsin Hamid’s The Reluctant Fundamentalist, Giada de Laurentiis’ Everyday Pasta and Mary Higgins Clark’s I Heard That Song Before.

First quarter losses were $1.7 million or $0.03 per share, better than the company’s guidance for a loss of $0.08 to $0.12 per share.  The company’s store opening and store closing schedule for 2007 has been adjusted and, as a result, certain expenses, amounting to $0.03 per share, which were planned for the first quarter are now expected to be incurred in the second and third quarters, and is reflected in the guidance below. 

Excluding charges of $0.06 per share associated with the closing of the company’s Internet distribution center and $0.07 per share for expenses associated with the review of its stock option practices, first quarter net earnings were $6.8 million or $0.10 per share.

In the first quarter of 2007, the company acquired 0.7 million shares for $27.9 million under its share repurchase program.

“The first quarter of 2007 is the first non-holiday period impacted by the new, lower prices to Members that we introduced last October,” said Steve Riggio, Chief Executive Officer.  “As expected, our gross margin declined due to greater discounts given to existing Members and from greater usage, as the size of our Member base continues to grow.   The first quarter also had one of the better hardcover new release schedules in some time, which brought our comps into positive territory and helped Internet sales grow.”

GUIDANCE

For the second quarter, the company expects comparable store sales at Barnes & Noble stores to increase in the low to mid-single digits, reflecting the additional sales volume expected with the July 21st release of Harry Potter and the Deathly Hallows.  For the full year, the company continues to expect comparable store sales to be flat to slightly positive. 

Barnes & Noble, Inc.’s second quarter earnings per share is expected to be in a range of $0.08 to $0.12.  For the full year, the company continues to expect earnings per share to be in a range of $1.49 to $1.67, or $1.67 to $1.81 excluding charges associated with the closing of the company’s Internet distribution center ($0.06 per share) and expenses associated with the company’s review of its stock option practices ($0.08 to $0.12 per share).

As of May 5, 2007, the company operated 696 Barnes & Noble stores and 97 B. Dalton stores.  During the first quarter, four Barnes & Noble stores were opened and three were closed.  B. Dalton closed one store during the quarter.

A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET on Thursday, May 24, 2007, and is accessible at www.barnesandnobleinc.com/webcasts.  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 23, 2007.

FINANCIAL TABLES

Here you can download financial tables related to the sales and earnings for the first quarter ended May 5, 2007.

Consolidated Statements of Operations (11 KB)
Consolidated Balance Sheets (14 KB)

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

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, the results of the internal review of the company’s stock option practices and the related inquiries by the Securities and Exchange Commission and the U.S. Department of Justice and related stockholder derivative lawsuits, 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.



About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller and a Fortune 500 company, operates 793 bookstores in 50 states. For the fifth 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 website: www.barnesandnobleinc.com.