Barnes and Noble 2002 Annual Report Download - page 17

52 WEEKS ENDED FEBRUARY 2, 2002 COMPARED
WITH 53 WEEKS ENDED FEBRUARY 3, 2001
Sales
The Company's sales increased $494.6 million or 11.3%
during fiscal 2001 to $4.870 billion from $4.376 billion
during fiscal 2000. Contributing to this improvement was
an increase of $363.8 million from Video Game &
Entertainment Software store sales. Fiscal 2001 sales from
Barnes & Noble bookstores, which contributed 69.0% of
total sales or 89.6% of total bookstore sales, increased
6.0% to $3.359 billion from $3.170 billion in fiscal 2000.
The increase in bookstore sales was primarily attributable
to the 2.7% growth in Barnes & Noble comparable store
sales and sales from the 40 new Barnes & Noble stores
opened during fiscal 2001. This increase was partially offset
by declining sales of B. Dalton, due to 35 store closings and
a comparable store sales decline of (3.7%) in fiscal 2001.
GameStop sales during fiscal 2001 increased to $1.121
billion from $757.6 million during fiscal 2000. This
increase in sales was primarily attributable to the 32.0%
growth in the GameStop comparable store sales and sales
from the 74 new GameStop stores opened during fiscal
2001. This increase was also attributable to the inclusion
of a full year of Funco, Inc. sales in fiscal 2001 compared
with sales for approximately one-half of fiscal 2000.
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 $390.3 million,
or 12.3%, to $3.560 billion in fiscal 2001 from $3.170
billion in fiscal 2000, primarily due to growth in the
Video Game & Entertainment Software segment. The
Company's gross margin rate decreased to 26.9% in
fiscal 2001 from 27.6% in fiscal 2000. This decrease
was primarily attributable to the lower gross margins
in the Video Game & Entertainment Software segment
and slightly lower gross margins in the bookstore segment
due to discounts related to the Readers’ Advantage™
program.
Selling and Administrative Expenses
Selling and administrative expenses increased $91.3
million, or 11.2%, to $904.3 million in fiscal 2001 from
$813.0 million in fiscal 2000, primarily due to growth in
the Video Game & Entertainment Software segment and
the increase in bookstore expenses from the opening of
40 Barnes & Noble stores in fiscal 2001. Selling and
administrative expenses remained unchanged at 18.6%
of sales during fiscal 2001 and 2000.
Legal Settlement Expense
In fiscal 2001, the Company recorded a pre-tax charge
of $4.5 million in connection with a lawsuit brought by
the American Booksellers Association and 26 independent
bookstores. The charges included a settlement of $2.4
million to be paid to plaintiffs and approximately $2.1
million in legal expenses incurred by the Company
during the first quarter.
Depreciation and Amortization
Depreciation and amortization increased $3.1 million,
or 2.1%, to $147.8 million in fiscal 2001 from $144.8
million in fiscal 2000. The increase was primarily the
result of the increase in depreciation and amortization
in the Video Game & Entertainment Software segment
offset by the reduction in depreciable assets in small-
format mall bookstores due to the impairment charge
recorded in fiscal 2000.
Pre-Opening Expenses
Pre-opening expenses increased in fiscal 2001 to $8.0
million from $7.7 million in fiscal 2000. Due to
management’s expense control efforts, pre-opening
expenses increased only slightly while opening 40
Barnes & Noble stores and 74 new GameStop stores in
fiscal 2001, compared with 32 new Barnes & Noble
stores and 65 new GameStop stores during fiscal 2000.
Operating Profit
Operating profit increased to $245.8 million in fiscal
2001 from $133.8 million in fiscal 2000. Operating
profit increased $9.6 million to $250.3 million, before
the effect of the $4.5 million legal settlement expense
during fiscal 2001, from $240.7 million, before the
effect of the $106.8 million impairment charge during
fiscal 2000. Bookstore operating profit decreased 7.9%
to $216.2 million, before the effect of the $4.5 million
legal settlement expense, from $234.6 million, before
the effect of the $106.8 million impairment charge,
primarily attributable to lower comparable store sales
and lower gross margins due to discounts related to the
Readers’ Advantage™ program. Bookstore operating
[MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS continued ]
16 2002 Annual ReportBarnes & Noble, Inc.