Barnes and Noble 2010 Annual Report Download - page 21

Company closed 33 B. Dalton stores, ending the period
with 52 B. Dalton stores and 0.2 million square feet. As of
January 31, 2009, the Company operated 778 stores in the
fifty states and the District of Columbia.
Cost of Sales and Occupancy
52 weeks ended
Dollars in thousands
January 31,
2009 % Sales
February 2,
2008 % Sales
Cost of Sales and
Occupancy $ 3,540,596 69.1% $ 3,679,845 69.6%
The Company’s cost of sales and occupancy includes costs
such as merchandise costs, distribution center costs
(including payroll, freight, supplies, depreciation and
other operating expenses), rental expense and common
area maintenance, partially offset by landlord tenant allow-
ances amortized over the life of the lease.
Cost of sales and occupancy decreased $139.2 million, or
3.8%, to $3.54 billion in fiscal 2008 from $3.68 billion
in fiscal 2007. As a percentage of sales, cost of sales and
occupancy decreased to 69.1% in fiscal 2008 from 69.6%
in fiscal 2007. This decrease was primarily attributable
to reduced promotional markdowns, better product mix
and increased volume through the Company’s distribution
centers, which more than offset the deleveraging of fixed
occupancy costs on the negative comparable store sales.
Selling and Administrative Expenses
52 weeks ended
Dollars in thousands
January 31,
2009 % Sales
February 2,
2008 % Sales
Selling and
Administrative
Expenses $ 1,251,524 24.4% $ 1,225,791 23.2%
Selling and administrative expenses increased $25.7
million, or 2.1%, to $1.25 billion in fiscal 2008 from $1.23
billion in fiscal 2007. As a percentage of sales, selling
and administrative expenses increased to 24.4% in fiscal
2008 from 23.2% in fiscal 2007. Included in selling and
administrative expenses in fiscal 2008 were an $11.7
million impairment charge for property and equipment,
an $8.3 million charge for the settlement with the State of
California regarding the collection of sales and use taxes
on sales made by Barnes & Noble.com from 1999 to 2005,
$4.1 million of severance related to the elimination of
certain corporate office expenses and a $3.0 million charge
related to a management resignation. Included in selling
and administrative expenses in fiscal 2007 were legal costs
of $11.1 million, and an impairment charge of $5.9 million,
offset by a $6.4 million gain in insurance proceeds from
the Hurricane Katrina settlement. Excluding these charges,
selling and administrative expenses increased in fiscal
2008 as a percentage of sales to 23.9% from 23.0% in fiscal
2007. This increase was primarily due to the deleveraging
of fixed expenses with the negative comparable store sales.
Depreciation and Amortization
52 weeks ended
Dollars in thousands
January 31,
2009 % Sales
February 2,
2008 % Sales
Depreciation and
Amortization $ 173,557 3.4% $ 168,600 3.2%
Depreciation and amortization increased $5.0 million, or
2.9%, to $173.6 million in fiscal 2008 from $168.6 mil-
lion in fiscal 2007. The increase was primarily due to the
depreciation on additional capital expenditures for existing
store maintenance, technology investments and new store
openings, offset by $2.6 million of accelerated deprecia-
tion in fiscal 2007 related to an Internet distribution center
closing.
Pre-opening Expenses
52 weeks ended
Dollars in thousands
January 31,
2009 % Sales
February 2,
2008 % Sales
Pre-opening Expenses $ 12,796 0.2% $ 10,387 0.2%
Pre-opening expenses increased $2.4 million, or 23.2%,
in fiscal 2008 to $12.8 million from $10.4 million in fiscal
2007. This was primarily the result of the timing of new
store openings.
Operating Profit
52 weeks ended
Dollars in thousands
January 31,
2009 % Sales
February 2,
2008 % Sales
Operating Profit $ 143,331 2.8% $ 202,051 3.8%
The Company’s consolidated operating profit decreased
$58.7 million, or 29.1%, to $143.3 million in fiscal 2008
from $202.0 million in fiscal 2007. This decrease in oper-
ating profit was primarily due to the negative comparable
store sales, as well as the matters discussed above.
2010 Annual Report 19