Barnes and Noble 2000 Annual Report Download - page 38

Earnings (Loss)
As a result of the factors discussed above, the Company
reported a consolidated net loss of ($52.0) million (or ($0.81)
per share). The Company’s earnings, before the effect of
the impairment charge, were $40.5 million during fiscal
2000 compared with $124.5 million during fiscal 1999.
Components of earnings per share are as follows:
Fiscal Year 2000 1999
Retail Earnings Per Share
Bookstores $1.85 1.62
Video Game & Entertainment
Software Stores (0.16 ) 0.10
Retail EPS $ 1.69 1.72
EPS Impact of Investing Activities
Cash:
Gain on Barnes & Noble.com $ -- 0.21
Gain on partial sale of Chapters -- 0.09
Non-cash:
Share in net losses of
Barnes & Noble.com ( 0.98 ) ( 0.35 )
Share of net losses from other
equity investments ( 0.08 ) ( 0.01 )
Gain on sale of investment
in NuvoMedia -- 0.19
Total Investing Activities $ (1.06) 0.13
Other Adjustments
Impairment charge $ ( 1.44 ) --
Ingram write-off -- ( 0.04 )
Change in accounting for
pre-opening costs -- ( 0.06 )
Total Other Adjustments $ ( 1.44 ) (0.10 )
Consolidated EPS $ ( 0.81 ) 1.75
52 WEEKS ENDED JANUARY 29, 2000 COMPARED
WITH 52 WEEKS ENDED JANUARY 30, 1999
Sales
The Company’s sales increased 16.0% during fiscal 1999
to $3.486 billion from $3.006 billion during fiscal 1998.
Contributing to this improvement was a 7.4% increase
attributable to the inclusion of Babbage’s Etc.’s sales
for the fourth quarter of 1999. Babbage’s Etc., one of
the nation’s largest operators of video game and
entertainment software stores, was acquired by the
Company on October 28, 1999. Fiscal 1999 sales from
Barnes & Noble “super” stores, which contributed 80.9%
of total sales or 86.5% of total bookstore sales, increased
12.2% to $2.822 billion from $2.515 billion in fiscal 1998.
The increase in bookstore sales was primarily
attributable to the 6.1% growth in Barnes & Noble
comparable store sales, full year sales from the 50 new
stores opened during fiscal 1998 and the opening of an
additional 38 Barnes & Noble stores during 1999.
This increase was partially offset by declining sales of
B. Dalton, due to 89 store closings.
Cost of Sales and Occupancy
The Company’s cost of sales and occupancy includes
costs such as rental expense, common area maintenance,
merchant association dues and lease-required advertising.
Cost of sales and occupancy increased to $2.484 billion
in fiscal 1999 from $2.143 billion in fiscal 1998 primarily
due to the inclusion of Babbage’s Etc.’s cost of sales
and occupancy in the fourth quarter of 1999. The
Company’s gross margin rate increased to 28.8% in fiscal
1999 from 28.7% in fiscal 1998. This increase was
attributable to improved leverage on occupancy costs as
well as a favorable merchandise mix in the bookstores,
partially offset by lower gross margins in the video game
and entertainment software stores.
Selling and Administrative Expenses
Selling and administrative expenses increased $70.5
million, or 12.1% to $651.1 million in fiscal 1999 from
$580.6 million in fiscal 1998 partially due to the inclusion
of Babbage’s Etc.’s selling and administrative expenses in
the fourth quarter of 1999. Selling and administrative
expenses decreased to 18.7% of sales during fiscal 1999
from 19.3% during fiscal 1998.
Depreciation and Amortization
Depreciation and amortization increased $24.0 million,
or 27.1%, to $112.3 million in fiscal 1999 from $88.3
million in fiscal 1998. The increase was primarily the
result of the depreciation related to Barnes & Noble stores
opened during fiscal 1999 and fiscal 1998, as well as
the depreciation on the Company’s BookMaster system
and the inclusion of Babbage’s Etc.’s fourth quarter
depreciation and amortization of $3.6 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued