Barnes and Noble 2002 Annual Report Download - page 10

MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company’s fiscal year is comprised of 52 or 53
weeks, ending on the Saturday closest to the last day
of January. As used in this section, “fiscal 2003”
represents the 52 weeks ending January 31, 2004,
“fiscal 2002” represents the 52 weeks ended February
1, 2003, “fiscal 2001” represents the 52 weeks ended
February 2, 2002 and “fiscal 2000” represents the 53
weeks ended February 3, 2001.
GENERAL
Barnes & Noble, Inc. (Barnes & Noble or the Company),
the nation’s largest bookseller1, as of February 1, 2003
operates 886 bookstores and 1,231 video-game and
entertainment-software stores. Of the 886 bookstores,
628 operate under the Barnes & Noble Booksellers,
Bookstop and Bookstar trade names (47 of which
were opened in fiscal 2002) and 258 operate under
the B. Dalton Bookseller, Doubleday Book Shops
and Scribner’s Bookstore trade names. Through its
approximate 38 percent interest in barnesandnoble.com
llc (Barnes & Noble.com), the Company is one of the
largest sellers of books on the Internet. The Company,
through its approximate 63 percent interest in
GameStop Corp., is the nation’s largest video-game
and PC-entertainment software specialty retailer,
operating 1,231 video-game and entertainment-software
stores under the GameStop, Babbage’s, Software Etc.
and FuncoLand trade names, a Web site, gamestop.com,
and Game Informer, one of the largest multi-platform
video-game magazines, with circulation of over
one million subscribers. The Company employed
approximately 50,000 full- and part-time employees as
of February 1, 2003.
Barnes & Noble is the nation’s largest operator of
bookstores1with 628 Barnes & Noble bookstores
located in 49 states and the District of Columbia as
of February 1, 2003. With more than 35 years of
bookselling experience, management has a strong
sense of customers’ changing needs and the Company
leads book retailing with a “community store” concept.
Barnes & Noble’s typical bookstore offers a
comprehensive title base, a café, a children’s section, a
music department, a magazine section and a calendar
of ongoing events, including author appearances and
children’s activities, that make each Barnes & Noble
bookstore an active part of its community.
Barnes & Noble bookstores range in size from 10,000 to
60,000 square feet depending upon market size, and each
store features an authoritative selection of books, ranging
from 60,000 to 200,000 titles. The comprehensive title
selection is diverse and reflects local interests. In addition,
Barnes & Noble emphasizes books published by small
and independent publishers and university presses.
Bestsellers represent only three percent of Barnes &
Noble bookstore sales. Complementing this extensive on-
site selection, all Barnes & Noble bookstores provide
customers with access to the millions of books available
to online shoppers while offering an option to have the
book sent to the store or shipped directly to the customer.
All Barnes & Noble bookstores are equipped with the
BookMaster in-store operating system, which enhances
the Company’s merchandise-replenishment system,
resulting in high in-stock positions and productivity at
the store level through efficiencies in receiving, cashiering
and returns processing.
During fiscal 2002, the Company added 1.0 million
square feet to the Barnes & Noble bookstore base,
bringing the total square footage to 15.2 million square
feet, a seven percent increase over the prior year. Barnes &
Noble bookstores contributed approximately 91 percent
of the Company’s total bookstore sales in fiscal 2002.
The Company plans to open between 35 and 40 Barnes
& Noble bookstores in fiscal 2003, which are expected
to average 25,000 square feet in size.
At the end of fiscal 2002, the Company operated 258
B. Dalton bookstores in 44 states and the District of
Columbia. B. Dalton bookstores employ merchandising
strategies that target the mainstream consumer book
market, offering a wide range of bestsellers and general-
interest titles. Most B. Dalton bookstores range in
size from 2,000 to 6,000 square feet, and while they
are appropriate to the size of adjacent mall tenants,
the opening of book superstores in nearby locations
continues to have a significant adverse impact on
B. Dalton bookstores.
The Company is continuing to execute a strategy to
maximize returns from its B. Dalton bookstores in
response to declining sales attributable primarily to
1Based upon sales reported in trade publications and public filings.
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2002 Annual Report ■Barnes & Noble, Inc.