Barnes and Noble 2013 Annual Report Download - page 4

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To Our Shareholders:
Barnes & Noble achieved a great deal during another year of remarkable change
in our industry. Our Retail and College businesses delivered solid performances,
demonstrating once again that they are valuable and profitable cornerstones
of our company. While our NOOK® business experienced a shortfall due to an
over-estimation of holiday customer demand, we have sold 10 million devices to
date and remain as committed as ever to delivering the best black-and-white and
color eReaders on the market.
Our bookstores had a solid year, with a 16% increase in earnings before interest,
taxes, depreciation and amortization (EBITDA), due primarily to gross margin
expansion and lower expenses. Driving sales was the runaway success of E.L.
James’ “Fifty Shades of Grey” and its sequels, which have sold over 70 million
copies worldwide and set the record as the fastest-selling paperback of all time,
surpassing the “Harry Potter” series. Most remarkable is that “Fifty Shades”
was initially self-published online, yet another sign of the democratization of
content and the opportunities it presents to authors and readers alike.
Barnes & Noble College continues to be a great success story. Sales increased
1.1% for the year, as new store growth offset a slight decline in comparable store
sales. College generated its best year of new contracts in the last decade, opening
49 new stores, and anticipating a strong pipeline of new contracts in the coming
year. At the same time, College continued to invest in digital education, extend-
ing its leadership as an innovator in this segment.
Losses in our NOOK segment were higher than expected, mainly due to the
shortfall in new product holiday sales for HD and HD+ tablets. Nonetheless, we
remain committed to offering customers the best digital bookstore experience
as we look to reduce NOOK losses. While our digital strategy is being refocused,
it remains rooted in our commitment to offer customers great content on any
device they choose.
BARNES & NOBLE 2013 LETTER TO SHAREHOLDERS
2 Barnes & Noble, Inc.