PW: B&N Looking for More Growth in Fiscal 2001

Jim Milliot |

May 29, 2000

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B&N Looking for More Growth in Fiscal 2001
Jim Milliot -- 5/29/00

Operating income at Barnes & Noble Inc.'s bookstore operations rose 17.1% to $216.7 million for the fiscal year ended January 29, 2000, the company reported in its 10-k filing with the Securities & Exchange Commission. Earlier in the year, the company reported an 8.5% gain in bookstore revenues to $3.26 billion (News, Mar. 20). The operating margin for the bookstore group improved to 6.6% from 6.2%, which B&N attributed to "better occupancy leverage" and a more favorable product mix.

Total operating income at B&N rose 25.4% to $232.1 million, due to the inclusion of earnings from Babbage's, which B&N acquired last October.

According to the filing, B&N has allocated between $120 million and $130 million for capital expenditures in the current year, with the majority of spending going toward the opening of between 40 and 45 superstores and up to 90 Babbage's stores. Capital expenditures in fiscal 2000 totaled $140 million. During the year, B&N will continue with plans to close approximately 50 Dalton stores. B&N began fiscal 2001 with 400 Dalton outlets. The company expects comparable-store sales at its superstores to increase 4%-5% in the current year.

The filing also noted that B&N spent $28 million to acquire its 49% stake in on-demand publisher iUniverse (News, Nov. 8, 1999).

In his letter to shareholders in the company's annual report, B&N chairman Len Riggio said that "change will be the order of the day" in the book business. "The time for t -dipping is long past," Riggio wrote, noting that B&N has invested heavily in the areas of online publishing, print-on-demand and e-book technologies. The company will also exploit its relationship with B&N.com as B&N continues to pursue its multi-channel course.

For the first quarter ended April 29, 2000, B&N reported that total company sales increased 24.5% to $894.3 million, while its net loss was cut to $4.1 million from $5.9 million. Bookstore sales were up 7.8% to $774.3 million, led by an 11.5% gain in superstore sales to $692.5 million. Comparable-store sales were up 6.7% at its superstores, but were down 2.5% at Dalton. According to B&N, during the quarter children's books, bargain books, music and cafe sales "were particularly robust."

Total revenues for B&N included $120 million in sales from Babbage's, a 21.8% increase over the first quarter of fiscal 2000 when the video game retailer was an independent company.
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A version of this article appeared in the 05/29/2000 issue of Publishers Weekly under the headline: