Barnes & Noble Reports Fiscal 2016 Year-End Financial Results

Guía de Regalos

Full-Year Comparable Store Sales are Flat – In-Line with Guidance

Core Comparable Store Sales Increase 0.4%

Company to Host Investor Day to Discuss Long-Term Objectives

NEW YORK–(BUSINESS WIRE)–Barnes & Noble, Inc. (NYSE: BKS) today reported sales and
earnings for its fiscal 2016 fourth quarter and full-year ended April
30, 2016.

Retail sales, which include Barnes & Noble stores and BN.com, were $850
million for the quarter and $4.0 billion for the full year, decreasing
2.2% and 1.9%, respectively. Comparable store sales declined 0.8% for
the quarter and were flat for the full year, in-line with Company
guidance. “Core” comparable store sales, which exclude sales of NOOK
products, declined 0.8% for the quarter, while increasing 0.4% for the
full year, slightly below expectations of an approximate 1% increase.
Sales for both the quarter and the year were also impacted by store
closures and lower online sales.

NOOK sales, which include digital content, devices and accessories, were
$42.0 million for the quarter and $191.5 million for the full year,
decreasing 20.0% and 27.4%, respectively, due primarily to lower device
and content sales.

Consolidated sales were $877 million for the quarter and $4.16 billion
for the year, decreasing 3.7% and 3.1%, respectively, as compared to the
prior year.

Retail incurred an operating loss of $34.9 million for the quarter and
an operating profit of $113.3 million for the year. NOOK generated an
operating loss of $23.1 million for the quarter and $98.6 million for
the year.

The consolidated fourth quarter net loss from continuing operations was
$30.6 million, or $0.42 per share, compared to a loss from continuing
operations of $3.0 million, or $0.12 per share, in the prior year.
Fiscal 2016 consolidated net earnings from continuing operations were
$14.7 million, or $0.05 per share, compared to net earnings from
continuing operations of $32.9 million, or $0.15 per share, in the prior
year.

For the fourth quarter, Retail incurred an EBITDA loss of $11.1 million,
which includes a previously disclosed $20.9 million pension settlement
charge related to the termination of the Company’s pension plan.
Excluding this charge, Retail EBITDA would have been $9.8 million during
the quarter, a decline of $23.3 million versus the prior year, primarily
on lower sales, increased promotional activity and higher store wages
and benefit costs.

For the full year, Retail generated EBITDA of $215.2 million, inclusive
of $35.2 million of charges, including the $20.9 million pension charge
noted above, a $10.5 million executive severance charge related to the
Barnes & Noble College spin-off and a $3.8 million publishing contract
impairment. Excluding these charges, Retail EBITDA would have been
$250.4 million for the year, declining $67.3 million primarily on lower
sales, increased advertising, higher store wages and expense deleverage.

Fourth quarter NOOK EBITDA losses were $14.9 million, which included
approximately $4.0 million of expenses incurred to further rationalize
the cost structure of the business. These expenses include transitional
costs to outsource certain technology functions, consulting fees, Retail
integration costs, and expenses to exit the U.K., apps and video
businesses. Excluding these items, NOOK EBITDA losses would have been
consistent with the third quarter.

Full year NOOK EBITDA losses were $64.7 million this year as compared to
$83.9 million a year ago, a 23% decrease as the Company continues to
focus on cost rationalization efforts.

On a consolidated basis, the fourth quarter EBITDA loss was $26.0
million, which includes the $20.9 million pension settlement charge.
Excluding the charge, the fourth quarter consolidated EBITDA loss would
have been $5.1 million. For the full year, consolidated EBITDA was
$150.5 million, which includes the $35.2 million of charges noted above.
Excluding the charges, consolidated EBITDA would have been $185.7
million for the full year.

Excluding the charges noted above, the consolidated fourth quarter net
loss from continuing operations would have been $17.8 million, or $0.24
per share, and fiscal 2016 consolidated net earnings from continuing
operations would have been $36.2 million, or $0.35 per share.

Return of Capital

During the quarter, the Company returned $21.5 million in cash to its
shareholders, including $11.3 million in dividends and $10.2 million
through share repurchases. The Company acquired approximately 964,000
shares at an average price of $10.61 during the quarter under its share
repurchase program.

Outlook

“As we look ahead to fiscal 2017 and beyond, we are focusing on
executing a number of initiatives to grow bookstore and online sales,
reduce Retail and NOOK expenses and grow our Membership base,” said Ron
Boire, Chief Executive Officer of Barnes & Noble, Inc. “We believe our
marketing, merchandising and Membership initiatives will lead to
increased traffic and conversion in our stores. We are also excited
about our plans to open four new concept stores opening later this year,
beginning with the first store opening this October in Eastchester, NY.
We look forward to discussing these initiatives at our Investor Day.”

For fiscal year 2017, the Company expects comparable bookstore sales to
be approximately flat to an increase of approximately 1%. The Company
also expects full year consolidated EBITDA to be in a range of $200
million to $250 million, with Retail EBITDA of $240 million to $280
million and NOOK EBITDA losses declining to a range of $30 million to
$40 million, including previously announced transitional costs.

Investor Day Webcast

The Company’s senior management will host an investor conference
beginning at 9:00 A.M. ET on Thursday, June 23, 2016 to discuss the
Company’s financial results, business strategy and longer-term outlook.
The webcast of this investor conference can be accessed on Barnes &
Noble, Inc.’s corporate website at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report fiscal 2017 first quarter results on or
about September 8, 2016.

About Barnes & Noble, Inc.

Barnes & Noble, Inc. (NYSE: BKS) is a Fortune 500 company, the nation’s
largest retail bookseller, and a leading retailer of content, digital
media and educational products. The Company operates 640 Barnes & Noble
bookstores in 50 states, and one of the Web’s premier e-commerce sites,
BN.com (www.bn.com).
The NOOK Digital business offers a lineup of popular NOOK (www.nook.com)
tablets and eReaders and an expansive collection of digital reading and
entertainment content through the NOOK Store®. The NOOK Store
features more than 4 million digital books in the US plus periodicals,
comics, apps, movies and TV shows, and offers the ability to enjoy
content across a wide array of popular devices through Free NOOK Reading
Appsavailable for Android, iOS® and
Windows®.

General information on Barnes & Noble, Inc. can be obtained by visiting
the Company’s corporate website at www.barnesandnobleinc.com.

Forward-Looking Statements

This press release contains certain forward-looking statements (within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended) and
information relating to Barnes & Noble that are based on the beliefs of
the management of Barnes & Noble as well as assumptions made by and
information currently available to the management of Barnes & Noble.
When used in this communication, the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,”
“projections,” and similar expressions, as they relate to Barnes & Noble
or the management of Barnes & Noble, identify forward-looking statements.

Such statements reflect the current views of Barnes & Noble with respect
to future events, the outcome of which is subject to certain risks,
including, among others, the general economic environment and consumer
spending patterns, decreased consumer demand for Barnes & Noble’s
products, low growth or declining sales and net income due to various
factors, including store closings, higher-than-anticipated or increasing
costs, including with respect to store closings, relocation, occupancy
(including in connection with lease renewals) and labor costs, the
effects of competition, the risk of insufficient access to financing to
implement future business initiatives, risks associated with data
privacy and information security, risks associated with Barnes & Noble’s
supply chain, including possible delays and disruptions and increases in
shipping rates, various risks associated with the digital business,
including the possible loss of customers, declines in digital content
sales, risks and costs associated with ongoing efforts to rationalize
the digital business and the digital business not being able to perform
its obligations under the Samsung commercial agreement and the
consequences thereof, the risk that financial and operational forecasts
and projections are not achieved, the performance of Barnes & Noble’s
initiatives including but not limited to its new store concept and
e-commerce initiatives, unanticipated adverse litigation results or
effects, potential infringement of Barnes & Noble’s intellectual
property by third parties or by Barnes & Noble of the intellectual
property of third parties, and other factors, including those factors
discussed in detail in Item 1A, “Risk Factors,” in Barnes & Noble’s
Annual Report on Form 10-K for the fiscal year ended May 2, 2015, and in
Barnes & Noble’s other filings made hereafter from time to time with the
SEC.

Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described as anticipated,
believed, estimated, expected, intended or planned. Subsequent written
and oral forward-looking statements attributable to Barnes & Noble or
persons acting on its behalf are expressly qualified in their entirety
by the cautionary statements in this paragraph. Barnes & Noble
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise after the date of this communication.

BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                   
  13 weeks ended   13 weeks ended     52 weeks ended   52 weeks ended
April 30, 2016   May 2, 2015 April 30, 2016   May 2, 2015
 
Sales $ 876,684 $ 910,079 $ 4,163,844 $ 4,297,108
Cost of sales and occupancy   610,926     610,272     2,836,547     2,871,184  
Gross profit   265,758     299,807     1,327,297     1,425,924  
Selling and administrative expenses 291,715 280,986 1,176,778 1,192,065
Depreciation and amortization   31,999     33,715     135,863     143,665  
Operating profit (loss) (57,956 ) (14,894 ) 14,656 90,194
Interest expense, net   1,537     2,955     8,770     17,678  
Income (loss) before taxes (59,493 ) (17,849 ) 5,886 72,516
Income taxes   (28,885 )   (14,830 )   (8,814 )   39,644  
Net income (loss) from continuing operations (30,608 ) (3,019 ) 14,700 32,872
Net income (loss) from discontinued operations       (16,402 )   (39,146 )   3,724  
Net income (loss) $ (30,608 ) $ (19,421 ) $ (24,446 ) $ 36,596  
 
Basic income (loss) per common share:
Income (loss) from continuing operations $ (0.42 ) $ (0.12 ) $ 0.05 $ 0.15
Income (loss) from discontinued operations   0.00     (0.26 )   (0.54 )   0.06  
Basic income (loss) per common share $ (0.42 ) $ (0.37 ) $ (0.49 ) $ 0.21  
 
Diluted income (loss) per common share:
Income (loss) from continuing operations $ (0.42 ) $ (0.12 ) $ 0.05 $ 0.15
Income (loss) from discontinued operations   0.00     (0.26 )   (0.54 )   0.06  
Diluted income (loss) per common share $ (0.42 ) $ (0.37 ) $ (0.49 ) $ 0.21  
 
Weighted average common shares outstanding:
Basic 73,680 63,198 72,410 60,842
Diluted 73,680 63,198 72,542 60,928
 
Dividends declared per common share $ 0.15 $ $ 0.60 $
 
Percentage of sales:
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales and occupancy   69.7 %   67.1 %   68.1 %   66.8 %
Gross profit   30.3 %   32.9 %   31.9 %   33.2 %
Selling and administrative expenses 33.3 % 30.9 % 28.3 % 27.7 %
Depreciation and amortization   3.7 %   3.7 %   3.3 %   3.3 %
Operating profit (loss) -6.6 % -1.6 % 0.4 % 2.1 %
Interest expense, net   0.2 %   0.3 %   0.2 %   0.4 %
Income (loss) before taxes -6.8 % -2.0 % 0.1 % 1.7 %
Income taxes   -3.3 %   -1.6 %   -0.2 %   0.9 %
Net income (loss) from continuing operations -3.5 % -0.3 % 0.4 % 0.8 %
Net income (loss) from discontinued operations   0.0 %   -1.8 %   -0.9 %   0.1 %
Net income (loss) -3.5 % -2.1 % -0.6 % 0.9 %
 
 
BARNES & NOBLE, INC. AND SUBSIDIARIES
Segment Information
(In thousands)
(Unaudited)
 
         
13 weeks ended 13 weeks ended 52 weeks ended 52 weeks ended
April 30, 2016   May 2, 2015 April 30, 2016   May 2, 2015
 
Sales  
Retail $ 850,024 $ 869,360 $ 4,028,614 $ 4,108,243
NOOK 41,952 52,431 191,520 263,833
Elimination   (15,292 )   (11,712 )   (56,290 )   (74,968 )
Total $ 876,684   $ 910,079   $ 4,163,844   $ 4,297,108  
 
Gross Profit
Retail $ 248,807 $ 268,444 $ 1,258,405 $ 1,309,397
NOOK   16,951     31,363     68,892     116,527  
Total $ 265,758   $ 299,807   $ 1,327,297   $ 1,425,924  
 
Selling and Administrative Expenses
Retail $ 259,868 $ 235,307 $ 1,043,221 $ 991,669
NOOK   31,847     45,679     133,557     200,396  
Total $ 291,715   $ 280,986   $ 1,176,778   $ 1,192,065  
 
EBITDA
Retail $ (11,061 ) $ 33,137 $ 215,184 $ 317,728
NOOK   (14,896 )   (14,316 )   (64,665 )   (83,869 )
Total $ (25,957 ) $ 18,821   $ 150,519   $ 233,859  
 
Depreciation and Amortization
Retail $ (23,809 ) $ (24,420 ) $ (101,888 ) $ (104,373 )
NOOK   (8,190 )   (9,295 )   (33,975 )   (39,292 )
Total $ (31,999 ) $ (33,715 ) $ (135,863 ) $ (143,665 )
 
Operating Profit (Loss)
Retail $ (34,870 ) $ 8,717 $ 113,296 $ 213,355
NOOK   (23,086 )   (23,611 )   (98,640 )   (123,161 )
Total $ (57,956 ) $ (14,894 ) $ 14,656   $ 90,194  
 
Net Income (Loss)
Operating profit (loss) $ (57,956 ) $ (14,894 ) $ 14,656 $ 90,194
Interest expense, net (1,537 ) (2,955 ) (8,770 ) (17,678 )
Income taxes 28,885 14,830 8,814 (39,644 )
Income (loss) from discontinued operations       (16,402 )   (39,146 )   3,724  
Total $ (30,608 ) $ (19,421 ) $ (24,446 ) $ 36,596  
 
 
 
Percentage of sales:
 
Gross Margin
Retail 29.3 % 30.9 % 31.2 % 31.9 %
NOOK   63.6 %   77.0 %   50.9 %   61.7 %
Total 30.3 % 32.9 % 31.9 % 33.2 %
 
Selling and Administrative Expenses
Retail 30.6 % 27.1 % 25.9 % 24.1 %
NOOK   119.5 %   112.2 %   98.8 %   106.1 %
Total 33.3 % 30.9 % 28.3 % 27.7 %
 
EBITDA
Retail -1.3 % 3.8 % 5.3 % 7.7 %
NOOK   -55.9 %   -35.2 %   -47.8 %   -44.4 %
Total -3.0 % 2.1 % 3.6 % 5.4 %
 
Depreciation and Amortization
Retail -2.8 % -2.8 % -2.5 % -2.5 %
NOOK   -30.7 %   -22.8 %   -25.1 %   -20.8 %
Total -3.7 % -3.7 % -3.3 % -3.3 %
 
Operating Profit (Loss)
Retail -4.1 % 1.0 % 2.8 % 5.2 %
NOOK   -86.6 %   -58.0 %   -72.9 %   -65.2 %
Total -6.6 % -1.6 % 0.4 % 2.1 %
 
 
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
         
  April 30, 2016   May 2, 2015
 
ASSETS
Current assets:
Cash and cash equivalents $ 13,838 $ 14,646
Receivables, net 124,917 60,265
Merchandise inventories, net 933,723 995,738
Prepaid expenses and other current assets 105,912 93,965
Short-term deferred taxes
Current assets of discontinued operations       447,626  
Total current assets 1,178,390 1,612,240
 
Property and equipment:
Land and land improvements 2,541 2,541
Buildings and leasehold improvements 1,058,452 1,057,975
Fixtures and equipment   1,560,005     1,531,315  
2,620,998 2,591,831
Less accumulated depreciation and amortization   2,322,418     2,250,096  
Net property and equipment   298,580     341,735  
 
Goodwill 211,276 215,197
Intangible assets, net 310,904 315,653
Other noncurrent assets 13,632 7,905
Noncurrent assets of discontinued operations       619,701  
Total assets $ 2,012,782   $ 3,112,431  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 480,574 $ 484,574
Accrued liabilities 360,194 326,660
Gift card liabilities 353,103 358,146
Current liabilities of discontinued operations       303,613  
Total current liabilities   1,193,871     1,472,993  
 
Long-term debt 47,200
Deferred taxes 54,017 15,795
Other long-term liabilities 114,184 162,209
Noncurrent liabilities of discontinued operations 76,017
 
Redeemable Preferred Shares 196,059
 
Preferred Member Interests in NOOK Media, LLC
 
Shareholders’ equity:
Common stock; $0.001 par value; 300,000 shares authorized;
111,228 and 98,115 shares issued, respectively 112 98
Additional paid-in capital 1,738,034 1,927,997
Accumulated other comprehensive loss 151 (16,533 )
Retained earnings (24,349 ) 357,512
Treasury stock, at cost, 37,941 and 34,841 shares, respectively   (1,110,438 )   (1,079,716 )
Total shareholders’ equity   603,510     1,189,358  
Commitments and contingencies        
Total liabilities and shareholders’ equity $ 2,012,782   $ 3,112,431  
 
 
BARNES & NOBLE, INC. AND SUBSIDIARIES
Earnings (Loss) Per Share
(In thousands, except per share data)
(Unaudited)
                 
       
13 weeks ended 13 weeks ended 52 weeks ended 52 weeks ended
April 30, 2016 May 2, 2015 April 30, 2016 May 2, 2015
Numerator for basic income (loss) per share:
Net income (loss) from continuing operations attributable to Barnes
& Noble, Inc.
$ (30,608 ) $ (3,019 ) $ 14,700 $ 32,872
Inducement fee paid upon conversion of Series J preferred stock (3,657 )
Preferred stock dividends (3,942 ) (15,767 )
Preferred stock dividends paid in shares (1,783 )
Accretion of dividends on preferred stock (315 ) (4,204 ) (7,339 )
Less allocation of dividends to participating securities (220 ) (1,219 )
Less allocation of undistributed earnings to participating securities               (535 )
Net income (loss) from continuing operations available to common
shareholders
(30,828 ) (7,276 ) 3,837 9,231
Net income (loss) from discontinued operations attributable to
Barnes & Noble, Inc.
(16,402 ) (39,146 ) 3,724
Less allocation of undistributed earnings to participating securities               (204 )
Net income (loss) from discontinued operations available to common
shareholders
      (16,402 )   (39,146 )   3,520  
Net income (loss) available to common shareholders $ (30,828 ) $ (23,678 ) $ (35,309 ) $ 12,751  
 
Numerator for diluted income (loss) per share:
Net income (loss) from continuing operations available to common
shareholders
$ (30,828 ) $ (7,276 ) $ 3,837 $ 9,231
Preferred stock dividends (a)
Accretion of dividends on preferred stock (a)
Allocation of undistributed earnings to participating securities 535
Less diluted allocation of undistributed earnings to participating
securities
              (534 )
Net income (loss) from continuing operations available to common
shareholders
(30,828 ) (7,276 ) 3,837 9,232
Net income (loss) from discontinued operations available to common
shareholders
(16,402 ) (39,146 ) 3,520
Allocation of undistributed earnings to participating securities 204
Less diluted allocation of undistributed earnings to participating
securities
              (204 )
Net income (loss) from discontinued operations available to common
shareholders
      (16,402 )   (39,146 )   3,520  
Net income (loss) available to common shareholders $ (30,828 ) $ (23,678 ) $ (35,309 ) $ 12,752  
 
Denominator for basic income (loss) per share:
Basic weighted average common shares 73,680 63,198 72,410 60,842
 
Denominator for diluted income (loss) per share:
Basic weighted average common shares 73,680 63,198 72,410 60,842
Preferred shares (a)
Average dilutive options 118 86
Average dilutive non-participating securities           14      
Diluted weighted average common shares   73,680     63,198     72,542     60,928  
 

Basic income (loss) per common share:

Income (loss) from continuing operations

$ (0.42 ) $ (0.12 ) $ 0.05 $ 0.15

Income (loss) from discontinued operations

      (0.26 )   (0.54 )   0.06  

Basic income (loss) per common share

$ (0.42 ) $ (0.37 ) $ (0.49 ) $ 0.21  

 

Diluted income (loss) per common share:

Income (loss) from continuing operations

$ (0.42 ) $ (0.12 ) $ 0.05 $ 0.15

Income (loss) from discontinued operations

      (0.26 )   (0.54 )   0.06  

Diluted income (loss) per common share

$ (0.42 ) $ (0.37 ) $ (0.49 ) $ 0.21  

 

 

(a) Although the Company was in a net income position during the
52 weeks ended April 30, 2016 and May 2, 2015, the dilutive effect
of the Company’s convertible preferred shares was excluded from
the calculation of income per share using the two-class method
because the effect would be antidilutive.

 
 
BARNES & NOBLE, INC. AND SUBSIDIARIES

Forward Looking Statement Non-GAAP Reconciliation

(In millions)
(Unaudited)
             
     
 
Forward Looking Range
 
EBITDA
Retail $

240

$ 280
NOOK   (40 )   (30 )
Total $

200

  $ 250  
 
Operating Profit
EBITDA $

200

$ 250
Depreciation and amortization   (120 )   (120 )
Total $

80

  $ 130  

Contacts

Barnes & Noble, Inc.
Media:
Mary
Ellen Keating, 212-633-3323
Senior Vice President
Corporate
Communications
mkeating@bn.com
or
Investor:
Andy
Milevoj, 212-633-3489
Vice President, Investor Relations
amilevoj@bn.com