Barnes and Noble 2011 Annual Report Download - page 16

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primarily due to higher NOOK and related accessories
and digital content sales, as well as higher sales of physi-
cal products.
In fi scal 2011, the Company opened one Barnes & Noble
store and closed 16, bringing its total number of Barnes &
Noble stores to 705 with 18.4 million square feet. In fi scal
2011, the Company added 15 B&N College stores and closed
16, ending the period with 636 B&N College stores. As of
April 30, 2011, the Company operated 1,341 stores in the fi fty
states and the District of Columbia.
Cost of Sales and Occupancy
52 weeks ended
Dollars in thousands
April 30,
2011 % Sales May 1, 2010 % Sales
B&N Retail $ 3,030,120 69.4% $ 2,971,893 67.5%
B&N College 1,392,880 78.4% 656,484 78.7%
B&N.com 782,712 91.2% 502,632 87.8%
Total Cost of Sales and
Occupancy $ 5,205,712 74.4% $ 4,131,009 71.1%
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, common area
maintenance and real estate taxes, partially off set by land-
lord tenant allowances amortized over the life of the lease.
Cost of sales and occupancy increased $1.07 billion, or
26.0%, to $5.21 billion, in fi scal 2011 from $4.13 billion in
fi scal 2010. Cost of sales and occupancy increased as a per-
centage of sales to 74.4% in fi scal 2011 from 71.1% in fi scal
2010. The increase or (decrease) by segment is as follows:
• B&N Retail cost of sales and occupancy increased as a
percentage of sales to 69.4% in fi scal 2011 from 67.5% in
fi scal 2010. This increase was primarily attributable to
greater NOOK™ device sales, which have lower margins.
• B&N College cost of sales and occupancy, included since
the Acquisition on September 30, 2009, decreased
slightly as a percentage of sales to 78.4% in fi scal 2011
from 78.7% in fi scal 2010. This decrease was primarily
attributable to higher general merchandise sales that
have higher margins.
• B&N.com cost of sales and occupancy increased as a
percentage of sales to 91.2% in fi scal 2011 from 87.8% in
fi scal 2010. This increase was primarily attributable to
greater NOOK™ device sales online, which have lower
margins.
Selling and Administrative Expenses
52 weeks ended
Dollars in thousands
April 30,
2011 % Sales May 1, 2010 % Sales
B&N Retail $ 1,085,688 24.9% $ 1,089,095 24.7%
B&N College 263,747 14.8% 152,168 18.3%
B&N.com 279,949 32.6% 150,944 26.4%
Total Selling and
Administrative
Expenses $ 1,629,384 23.3% $ 1,392,207 24.0%
Selling and administrative expenses increased $237.2
million, or 17.0%, to $1.63 billion in fi scal 2011 from $1.39
billion in fi scal 2010. Selling and administrative expenses
decreased as a percentage of sales to 23.3% in fi scal 2011
from 24.0% in fi scal 2010. The increase or (decrease) by
segment is as follows:
• B&N Retail selling and administrative expenses
increased slightly as a percentage of sales to 24.9% in
fi scal 2011 from 24.7% in fi scal 2010. This increase was
primarily attributable to legal costs relating to the share-
holder rights plan litigation and a proxy contest.
• B&N College selling and administrative expenses,
included since the Acquisition on September 30, 2009,
decreased as a percentage of sales to 14.8% in fi scal 2011
from 18.3% in fi scal 2010. This decrease was primarily
attributable to the inclusion of the Fall back to school
rush period in fi scal 2011, resulting in greater leverage
on sales.
• B&N.com selling and administrative expenses increased
as a percentage of sales to 32.6% in fi scal 2011 from
26.4% in fi scal 2010. This increase was primarily attrib-
utable to increased resources allocated to the Company’s
digital strategies, including the marketing program relat-
ing to the launch of NOOK Color and the increased cost
related to the Company’s customer service center.
Depreciation and Amortization
52 weeks ended
Dollars in thousands
April 30,
2011 % Sales May 1, 2010 % Sales
B&N Retail $ 157,528 3.6% $ 157,663 3.6%
B&N College 43,148 2.4% 24,863 3.0%
B&N.com 27,971 3.3% 25,248 4.4%
Total Depreciation and
Amortization $ 228,647 3.3% $ 207,774 3.6%
14 Barnes & Noble, Inc. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued