Barnes and Noble 2015 Annual Report Download - page 22

Download and view the complete annual report

Please find page 22 of the 2015 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 80

  • 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
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

sales mix of higher margin core products (which excludes
NOOK® products), which decreased costs of goods sold
and occupancy as a percentage of sales by  basis points,
increased vendor allowances on additional showroom
partnerships, which decreased costs of sales and occu-
pancy as a percentage of sales by  basis points, and
favorable settlements, which decreased costs of sales and
occupancy as a percentage of sales by  basis points on
improvements to the distribution center accrual recon-
ciliation process. These favorable variances were par-
tially offset by higher occupancy costs, which increased
cost of goods sold and occupancy as a percentage of sales
by  basis points and expense deleverage of  basis
points against the sales decline, as described above.
tB&N College cost of sales and occupancy decreased as a
percentage of sales to . in fiscal  from .
in fiscal  due to a favorable sales mix of higher
margin textbook rentals and general merchandise,
which decreased costs of goods sold and occupancy
as a percentage of sales by  basis points and a .
million favorable LIFO adjustment this year compared
to a . million unfavorable LIFO adjustment last year,
which decreased costs of goods sold and occupancy as
a percentage of sales by  basis points. These were
partially offset by higher occupancy costs as a percentage
of sales of  basis points as a result of contract renewals.
As B&N College expanded its textbook rental offerings,
its consumers have been shifting away from higher
priced textbook purchases to lower priced rental options.
General merchandise sales have continued to increase as
B&N College continues to expand its general merchan-
dise product offerings in its stores.
tNOOK cost of sales and occupancy decreased as a
percentage of sales to . in fiscal  from .
in fiscal . During fiscal , the Company recorded
. million of additional inventory related charges,
of which . million was recorded to cost of sales
and the remainder related to sales allowances, as the
holiday sales shortfall resulted in higher than anticipated
levels of finished and unfinished goods. The current
year includes a reduction in cost of sales of . million
as the Company sold through devices at higher average
selling prices than originally anticipated, and also was
able to use parts and components, which were previ-
ously written down, to build more devices to meet higher
than expected demand. The current year also includes
. million of inventory charges to write down device
development and other costs reflective of changes to the
Company’s device strategy.
Gross Margin
53 Weeks Ended 52 Weeks Ended
Dollars in thousands
May 3,
2014 % Sales
April 27,
2013 % Sales
B&N Retail $1,338,289 31.2% $ 1,399,723 30.6%
B&N College 437,369 25.0% 405,076 23.0%
NOOK 82,277 24.3% (122,293) (24.1)%
Total Gross Margin $1,857,935 29.1% $ 1,682,506 24.6%
The Company’s consolidated gross margin increased .
million, or ., to . billion in fiscal  from .
billion in fiscal . This increase was due to the matters
discussed above.
Selling and Administrative Expenses
53 Weeks Ended 52 Weeks Ended
Dollars in thousands
May 3,
2014 % Sales
April 27,
2013 % Sales
B&N Retail $ 984,236 22.9% $ 1,023,633 22.4%
B&N College 322,819 18.5% 293,618 16.7%
NOOK 299,881 88.7% 358,125 70.6%
Total Selling and
Administrative Expenses $ 1,606,936 25.2% $ 1,675,376 24.5%
Selling and administrative expenses decreased .
million, or ., to . billion in fiscal  from .
billion in fiscal . Selling and administrative expenses
increased as a percentage of sales to . in fiscal 
from . in fiscal . The change as a percentage of
sales by segment is as follows:
tB&N Retail selling and administrative expenses
increased as a percentage of sales to . in fiscal 
from . in fiscal . This increase was primarily
due to deleveraging against the sales decline of  basis
points, primarily store payroll and corporate overhead
costs, given the comparable store sales decline.
tB&N College selling and administrative expenses
increased as a percentage of sales to . in fiscal 
from . in fiscal . This increase was primarily
due to deleveraging against the sales decline as well as
continued investments in YuzuTM, B&N College’s digital
education platform. The investment in Yuzu™ increased
. million, or  basis points, to . million in
fiscal , as compared to . million in fiscal .
Excluding Yuzu™, B&N College’s selling and administra-
tive expenses increased by  basis points as a percent-
age of sales, as store payroll and corporate overhead costs
delevered against the comparable store sales decline.
20 Barnes & Noble, Inc. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued