Barnes and Noble 1997 Annual Report Download - page 17

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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 1997” represents the 52 weeks ended
January 31, 1998, “fiscal 1996” represents the 53 weeks ended
February 1, 1997 and “fiscal 1995” represents the 52 weeks ended
January 27, 1996.
GENERAL
Barnes & Noble, Inc. (Barnes & Noble or the Company), the
world’s largest bookseller*, as of January 31, 1998 operates 483
“super” stores, 65 of which were opened in fiscal 1997, under
the Barnes & Noble Booksellers, Bookstop and Bookstar
trade names, and 528 mall bookstores under the B. Dalton
Booksellers, Doubleday Book Shops and Scribner’s Bookstore
trade names. Barnes & Noble publishes books under its
own imprint for exclusive sale through its retail stores and
mail-order catalogs. The Company is also the exclusive bookseller
in America Online’s Marketplace (keyword: BarnesandNoble)
and maintains its own Web site (BarnesandNoble.com), operating
the “world’s largest bookseller online.” The Company employed
approximately 27,200 full- and part-time booksellers and created
nearly 3,200 new jobs nationwide during fiscal 1997 primarily due
to its Barnes & Noble store expansion.
Barnes & Noble is the largest operator of book “super” stores
in the United States* with 483 Barnes & Noble stores located in 48
states and the District of Columbia as of January 31, 1998. With
more than 30 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 store offers a comprehensive title base, a café, a
children’s section, a music department and a calendar of ongoing
events, including author appearances and children’s activities, that
make each Barnes & Noble store an active part of its community.
Management estimates that as much as 80% of the sales generated
by a new Barnes & Noble store is incremental to the community in
which the store is located, representing a combination of
previously unfulfilled and newly created demand.
Barnes & Noble stores 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
175,000 titles. The comprehensive title selection is diverse and
reflects local interests. To further this diversity, Barnes & Noble
emphasizes books published by small and independent publishers
and university presses. Bestsellers represent only 3% of Barnes &
Noble store sales. In addition to the extensive on-site selection,
each store can fill customers’ special order requests from the more
than one million books in print.
Barnes & Noble stores opened during fiscal 1997 added
1.6 million square feet to the Barnes & Noble base, bringing the
total square footage to 10.8 million square feet, a 16% increase
over the prior year. Barnes & Noble stores generated more than
80% of the Company’s total revenues in fiscal 1997. The Company
plans to open approximately 60 Barnes & Noble stores in 1998
which are expected to average 26,000 square feet in size.
At the end of fiscal 1997, the Company operated 528
B. Dalton stores in 45 states and the District of Columbia.
B. Dalton stores employ merchandising strategies that target the
“middle-American” consumer book market, offering a wide range
of bestsellers and general-interest titles. Doubleday and Scribner’s
bookstores utilize a more upscale format aimed at the “carriage
trade” in higher-end shopping malls and place a greater emphasis
on hardcover and gift books. Most B. Dalton stores range in size
from 2,800 to 6,000 square feet, and while they are appropriate to
the size of adjacent mall tenants, the opening of superstores in
nearby locations continues to have a significant impact on
B. Dalton stores.
The Company is continuing to execute its strategy to maxi-
mize returns from its B. Dalton division in response to declining
sales attributable primarily to superstore competition and, to a
lesser extent, weaker overall consumer traffic in shopping malls.
Part of the Company’s strategy has been to close underperforming
stores, which has resulted in the closing of more than 50 B. Dalton
stores per year since 1989.
The Company has also been expanding the size of some of its
new B. Dalton stores and is seeking better locations within malls.
A new B. Dalton prototype was developed for this purpose in 1993
and, since that time, more than 100 new or converted stores have
been opened and are performing, on average, better than the
remaining store base.
* based upon sales reported in trade publications and public filings