The Incredibly Shrinking Dalton

The closure of 33 Dalton outlets last year plus a drop in same-store sales resulted in a 20.1% decline in sales at Barnes & Noble’s mall store operation, according to figures released in B&N’s 10-k filing. B&N has been steadily phasing out Dalton and has an opportunity to drastically shrink the segment in 2009. Of the 52 Dalton stores open at the beginning of the year, four are on month-to-month leases, while the leases expire within the year at another 45 outlets. B&N has not talked about its plans for Dalton this year. It has closed 915 Dalton stores since 1989 as part of its “controlled descent” in the number of Daltons it operates.

With the sale of its stake in the Calendar Club this past February, B&N’s “other” segment now consists primarily of third-party sales through its Sterling subsidiary. Sterling’s sales to stores outside of B&N fell almost 18% last year, to $63.2 million, from $76.9 million in 2007, which was the publisher’s best year since being acquired by the retailer. Third-party Sterling sales were $70.3 million in 2006 and $56.1 million in 2005.

As for the Calendar Club, that operation had sales of $113.5 million in 2008, down from $124.1 million in 2007. The business had been marginally profitable for B&N, generating an operating profit of $888,000 in 2007. Last year, Calendar Club, which was classified as a discontinued operation, had a loss of $9.5 million, a figure that includes several charges.

Other write-offs taken by B&N in the year include $4.1 million for severance related to eliminating 100 corporate positions, and a $3 million charge associated with the resignation of Maria Toulantis, former B&N.com president.

Sales by Segment, 2007—2008 ($ in millions)