Barnes and Noble 2004 Annual Report Download - page 6

Download and view the complete annual report

Please find page 6 of the 2004 Barnes and Noble annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 56

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56

[LETTER TO OUR SHAREHOLDERS continued ]
4
2004 Annual ReportBarnes & Noble, Inc.
Our merger with Barnes & Noble.com was completed in May 2004. Despite the pressures within the
extremely competitive e-commerce industry, the company has substantially improved its operating
performance over the last three years and continued this trend into 2004, narrowing net losses by
18% from 2003. In 2004, Barnes & Noble.com launched its nationwide “Fast & Free Delivery”
service, one of the most competitive delivery offerings available from any online retailer. Any in-stock
new book, music or movie is delivered in one to three days within the continental United States, with
free delivery on purchases of $25 or more.
Barnes & Noble.com also achieved an important milestone in 2004. In the American Customer
Satisfaction Index, compiled by the University of Michigan and issued in the fourth quarter of 2004,
Barnes & Noble.com received the highest rating of any e-commerce company. This annual survey is
recognized as the industry’s leading indicator of customer satisfaction. The report confirms feedback
we have received from our customers who have sent us thousands of emails, expressing their thanks
for our superior service, vast selection and unique content features. In addition, Barnes & Noble.com
has also received high marks in a number of other important Web measurement studies, including
Keynote Systems, Inc.’s “Best of the Web Keynote Evaluation,” which gave Barnes & Noble.com a
No. 1 ranking for search.
It is interesting to note the value of the impressions generated by the huge amount of traffic to
Barnes & Noble.com. In the Web advertising marketplace, the value of an equal amount of exposure
would be in the tens of millions of dollars. This reinforces our belief that Barnes & Noble.com not
only serves as our direct-to-home delivery service, but also as a broadcast channel and advertising
medium for the Barnes & Noble brand.
Our publishing business performed strongly during the year. Self-published books continued to grow
as a percentage of our book sales, as well as total store sales in 2004. Hippie, published by our
Sterling Publishing division, was the company’s first title to appear on The New York Times
nonfiction bestseller list in September 2004.
In October, we sold to GameStop 6.1 million of its shares and distributed the remaining 29.9 million
shares we owned directly to Barnes & Noble shareholders. Our shareholders now have direct
ownership interests in both Barnes & Noble and GameStop, each of which they are free to trade.
While our acquisition of GameStop in 1999 was an enormous success - our $400 million investment
grew to over $850 million - we concluded that our shareholders would be better served by this spin-
off because we believed the values of Barnes & Noble and GameStop would be enhanced by trading
separately and not as a conglomerated entity. Since the transaction, both Barnes & Noble and
GameStop stocks have traded above pre-spin-off levels. We believe that through this spin-off, we were
able to unlock the inherent value of this tremendous investment for our shareholders.