Press Release: Barnes & Noble Reports Fiscal 2016 Results; Store Sales Are Flat

NEW YORK — June 22, 2016 — Barnes & Noble, Inc. (NYSE: BKS) today reported sales and earnings for its fiscal 2016 fourth quarter and full-year ended April 30, 2016.

Retail sales, which include Barnes & Noble stores and BN.com, were $850 million for the quarter and $4.0 billion for the full year, decreasing 2.2% and 1.9%, respectively.  Comparable store sales declined 0.8% for the quarter and were flat for the full year, in-line with Company guidance.  “Core” comparable store sales, which exclude sales of NOOK® products, declined 0.8% for the quarter, while increasing 0.4% for the full year, slightly below expectations of an approximate 1% increase.  Sales for both the quarter and the year were also impacted by store closures and lower online sales.

NOOK sales, which include digital content, devices and accessories, were $42.0 million for the quarter and $191.5 million for the full year, decreasing 20.0% and 27.4%, respectively, due primarily to lower device and content sales.

Consolidated sales were $877 million for the quarter and $4.16 billion for the year, decreasing 3.7% and 3.1%, respectively, as compared to the prior year.

Retail incurred an operating loss of $34.9 million for the quarter and an operating profit of $113.3 million for the year.  NOOK generated an operating loss of $23.1 million for the quarter and $98.6 million for the year.

The consolidated fourth quarter net loss from continuing operations was $30.6 million, or $0.42 per share, compared to a loss from continuing operations of $3.0 million, or $0.12 per share, in the prior year.  Fiscal 2016 consolidated net earnings from continuing operations were $14.7 million, or $0.05 per share, compared to net earnings from continuing operations of $32.9 million, or $0.15 per share, in the prior year.

For the fourth quarter, Retail incurred an EBITDA loss of $11.1 million, which includes a previously disclosed $20.9 million pension settlement charge related to the termination of the Company’s pension plan.  Excluding this charge, Retail EBITDA would have been $9.8 million during the quarter, a decline of $23.3 million versus the prior year, primarily on lower sales, increased promotional activity and higher store wages and benefit costs.

For the full year, Retail generated EBITDA of $215.2 million, inclusive of $35.2 million of charges, including the $20.9 million pension charge noted above, a $10.5 million executive severance charge related to the Barnes & Noble College spin-off and a $3.8 million publishing contract impairment.  Excluding these charges, Retail EBITDA would have been $250.4 million for the year, declining $67.3 million primarily on lower sales, increased advertising, higher store wages and expense deleverage.

Fourth quarter NOOK EBITDA losses were $14.9 million, which included approximately $4.0 million of expenses incurred to further rationalize the cost structure of the business.  These expenses include transitional costs to outsource certain technology functions, consulting fees, Retail integration costs, and expenses to exit the U.K., apps and video businesses.  Excluding these items, NOOK EBITDA losses would have been consistent with the third quarter.

Full year NOOK EBITDA losses were $64.7 million this year as compared to $83.9 million a year ago, a 23% decrease as the Company continues to focus on cost rationalization efforts.

On a consolidated basis, the fourth quarter EBITDA loss was $26.0 million, which includes the $20.9 million pension settlement charge. Excluding the charge, the fourth quarter consolidated EBITDA loss would have been $5.1 million.  For the full year, consolidated EBITDA was $150.5 million, which includes the $35.2 million of charges noted above.  Excluding the charges, consolidated EBITDA would have been $185.7 million for the full year.

Excluding the charges noted above, the consolidated fourth quarter net loss from continuing operations would have been $17.8 million, or $0.24 per share, and fiscal 2016 consolidated net earnings from continuing operations would have been $36.2 million, or $0.35 per share.

Return of Capital
During the quarter, the Company returned $21.5 million in cash to its shareholders, including $11.3 million in dividends and $10.2 million through share repurchases.  The Company acquired approximately 964,000 shares at an average price of $10.61 during the quarter under its share repurchase program.

Outlook
“As we look ahead to fiscal 2017 and beyond, we are focusing on executing a number of initiatives to grow bookstore and online sales, reduce Retail and NOOK expenses and grow our Membership base,” said Ron Boire, Chief Executive Officer of Barnes & Noble, Inc.  “We believe our marketing, merchandising and Membership initiatives will lead to increased traffic and conversion in our stores.  We are also excited about our plans to open four new concept stores opening later this year, beginning with the first store opening this October in Eastchester, NY.  We look forward to discussing these initiatives at our Investor Day.”

For fiscal year 2017, the Company expects comparable bookstore sales to be approximately flat to an increase of approximately 1%. The Company also expects full year consolidated EBITDA to be in a range of $200 million to $250 million, with Retail EBITDA of $240 million to $280 million and NOOK EBITDA losses declining to a range of $30 million to $40 million, including previously announced transitional costs.

Investor Day Webcast
The Company’s senior management will host an investor conference beginning at 9:00 A.M. ET on Thursday, June 23, 2016 to discuss the Company's financial results, business strategy and longer-term outlook. The webcast of this investor conference can be accessed on Barnes & Noble, Inc.'s corporate website at www.barnesandnobleinc.com/webcasts.

Barnes & Noble, Inc. will report fiscal 2017 first quarter results on or about September 8, 2016.

Financial Tables
Download financial tables related to the sales and earnings for the fiscal 2016 fourth quarter and full-year ended April 30, 2016:

Consolidated Statements of Operations
Consolidated Balance Sheets
Segment Information
Loss Per Share
Guidance Reconciliation

About Barnes & Noble, Inc.
Barnes & Noble, Inc. (NYSE: BKS) is a Fortune 500 company, the nation’s largest retail bookseller, and a leading retailer of content, digital media and educational products. The Company operates 640 Barnes & Noble bookstores in 50 states, and one of the Web’s premier e-commerce sites, BN.com (www.bn.com). The NOOK Digital business offers a lineup of popular NOOK (www.nook.com) tablets and eReaders and an expansive collection of digital reading and entertainment content through the NOOK Store®. The NOOK Store features more than 4 million digital books in the US plus periodicals, comics, apps, movies and TV shows, and offers the ability to enjoy content across a wide array of popular devices through Free NOOK Reading Apps™ available for Android™, iOS® and Windows®.

General information on Barnes & Noble, Inc. can be obtained by visiting the Company's corporate website at www.barnesandnobleinc.com.