Barnes and Noble 1997 Annual Report Download - page 8

4
ABANNERYEAR
1997 IN REVIEW
The results of our long-term
strategies were powerfully
evidenced by:
•Record-breaking revenues
• Strong comparable store sales
• Operating profits in each of
four quarters
• Positive cash flow
• Highest-ever net earnings
The performance of Barnes &
Noble stock reflected the market’s
recognition of both our strong
fundamentals and our future growth
prospects. In fiscal 1997, Barnes
& Noble’s market capitalization
increased more than $1.1 billion,
and our stock price grew 104%.
Revenues and Comparable
Store Sales
Total revenues rose to an all-time
high of $2.797 billion, 14% over
1996. Barnes & Noble “super”
store revenues rose 21% to $2.246
billion and contributed 80% of
the total. Sales of bestsellers
represented less than 3% of total
revenues, emphasizing the
diversity of our title offerings.
Barnes & Noble comparable
“super”store sales were up 9.4% in
1997. This performance, among the
best in the entire retail industry, as
well as the best in book retailing,
was due to an excellent merchandis-
ing plan, high in-stock position and
enhanced store-level execution.
Seventy-nine percent of our “super”
stores are now in the comp pool
and prospects for further growth
are strong. The early performance
of BarnesandNoble.com has been
impressive—1997 revenues for the
online business, in operation for
just eight months of the fiscal year,
nearly doubled in each of its first
three quarters for a total of $14.6
million. These early revenues fur-
ther evidence the power of the
Barnes & Noble brand. During
this launch phase, which was not
supported by advertising expendi-
tures, customers visited our Web
site and purchased books largely
based on word-of-mouth.
Operating Profits
For the first time since the“super”
store rollout began in 1990 we
posted operating profits inallof our
fiscal quarters. Operating profit of
$147.3 million reflecteda 23%
increase over 1996, and as a per-
centage of revenues, grew to 5.3%
from last year’s 4.9%.
The operating profit increase
can be attributed to two major
factors. First, gross margin grew
73 basis points primarily as a
result of our continuing focus on
direct buying, which is facilitated
by the Barnes & Noble central
distribution center. The distribu-
tion center, which opened in
September of 1996, has brought
1997 was another outstanding year for Barnes &Noble, the world’s largest bookseller, as we continued
to outdistance our competition, drawing 14% of the large, robust U.S. consumer book market. In May
of 1997, we launched BarnesandNoble.com, extending the global reach of the company and enhancing
our already formidable brand. In April 1998, we were named to the Fortune 500
and were ranked eighth in the nation in highest total return to investors.