Barnes & Noble Reports First Quarter Financial Results: Exceeds Earnings Per Share Guidance
Declares Quarterly Dividend

Barnes & Noble, Inc. (NYSE: BKS), the worlds largest bookseller, today reported sales and earnings for the first quarter ended May 5, 2007. In addition, the company also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per share for stockholders of record at the close of business on June 8, 2007, payable on June 29, 2007.

Sales for the first quarter increased 3% to $1.1 billion. Barnes & Noble store sales increased 3.3% to $1.0 billion, with comparable store sales increasing 1.7% for the quarter. Barnes & Noble.com sales were $93.8 million for the quarter, an 8.0% comparable sales increase compared to the prior year period.

Bestselling titles during the quarter included Rhonda Byrnes The Secret, Chris Bohjalians The Double Bind, Mohsin Hamids The Reluctant Fundamentalist, Giada de LaurentiisEveryday Pasta and Mary Higgins Clarks I Heard That Song Before.

First quarter losses were $1.7 million or $0.03 per share, better than the companys guidance for a loss of $0.08 to $0.12 per share. The companys store opening and store closing schedule for 2007 has been adjusted and, as a result, certain expenses, amounting to $0.03 per share, which were planned for the first quarter are now expected to be incurred in the second and third quarters, and is reflected in the guidance below.

Excluding charges of $0.06 per share associated with the closing of the companys Internet distribution center and $0.07 per share for expenses associated with the review of its stock option practices, first quarter net earnings were $6.8 million or $0.10 per share.

In the first quarter of 2007, the company acquired 0.7 million shares for $27.9 million under its share repurchase program.

The first quarter of 2007 is the first non-holiday period impacted by the new, lower prices to Members that we introduced last October, said Steve Riggio, Chief Executive Officer. As expected, our gross margin declined due to greater discounts given to existing Members and from greater usage, as the size of our Member base continues to grow. The first quarter also had one of the better hardcover new release schedules in some time, which brought our comps into positive territory and helped Internet sales grow.

GUIDANCE

For the second quarter, the company expects comparable store sales at Barnes & Noble stores to increase in the low to mid-single digits, reflecting the additional sales volume expected with the July 21st release of Harry Potter and the Deathly Hallows. For the full year, the company continues to expect comparable store sales to be flat to slightly positive.

Barnes & Noble, Inc.s second quarter earnings per share is expected to be in a range of $0.08 to $0.12. For the full year, the company continues to expect earnings per share to be in a range of $1.49 to $1.67, or $1.67 to $1.81 excluding charges associated with the closing of the companys Internet distribution center ($0.06 per share) and expenses associated with the companys review of its stock option practices ($0.08 to $0.12 per share).

As of May 5, 2007, the company operated 696 Barnes & Noble stores and 97 B. Dalton stores. During the first quarter, four Barnes & Noble stores were opened and three were closed. B. Dalton closed one store during the quarter.

A conference call with Barnes & Noble, Inc.s senior management will be webcast beginning at 10:00 A.M. ET on Thursday, May 24, 2007, and is accessible at www.barnesandnobleinc.com/webcasts.The call will also be archived at www.fulldisclosure.com for one year.

Barnes & Noble, Inc. will report second quarter earnings on or about August 23, 2007.

ABOUT BARNES & NOBLE, INC.

Barnes & Noble, Inc. (NYSE: BKS), the worlds largest bookseller and a Fortune 500 company, operates 793 bookstores in 50 states. For the fifth year in a row, the company is the nations top retail brand for quality, according to the EquiTrend® Brand Study by Harris Interactive®. Barnes & Noble conducts its online business through Barnes & Noble.com (www.bn.com), one of the Webs largest e-commerce sites and the number one online bookseller for quality among e-commerce companies, according to the latest EquiTrend survey.

General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the companys corporate website: www.barnesandnobleinc.com.

SAFE HARBOR

This press release contains forward-looking statements. Barnes & Noble is including this statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. These forward-looking statements are based on currently available information and represent the beliefs of the management of the company. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks include, but are not limited to, the results of the internal review of the companys stock option practices and the related inquiries by the Securities and Exchange Commission and the U.S. Department of Justice and related stockholder derivative lawsuits, general economic and market conditions, decreased consumer demand for the companys products, possible disruptions in the companys computer or telephone systems, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible disruptions or delays in the opening of new stores or the inability to obtain suitable sites for new stores, higher than anticipated store closing or relocation costs, higher interest rates, the performance of the companys online and other initiatives, the successful integration of acquired businesses, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, product shortages, and other factors which may be outside of the companys control. Please refer to the companys annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially.

BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
13 weeks ended13 weeks ended

May 5, 2007

April 29, 2006

Sales $ 1,145,395  1,114,735 
Cost of sales and occupancy 811,364  775,985 
Gross profit 334,031  338,750 
Selling and administrative expenses 295,208  281,142 
Depreciation and amortization 45,508  40,555 
Pre-opening expenses 1,034  3,280 
Operating profit (loss) (7,719) 13,773 
Interest income, net 3,138  1,510 
Income (loss) before taxes and minority interest (4,581) 15,283 
Income taxes (1,832) 6,228 
Income (loss) before minority interest (2,749) 9,055 
Minority interest 1,078  936 

Net income (loss)

$ (1,671) 9,991 

Income (loss) per common share:

Basic $ (0.03) 0.15 
Diluted $ (0.03) 0.14 
Weighted average common shares outstanding
Basic 65,209  65,745 
Diluted 65,209  70,100 
Percentage of sales:
Sales 100.0% 100.0%
Cost of sales and occupancy 70.8% 69.6%
Gross profit 29.2% 30.4%
Selling and administrative expenses 25.8% 25.2%
Depreciation and amortization 4.0% 3.6%
Pre-opening expenses 0.1% 0.3%
Operating profit (loss) -0.7% 1.2%
Interest income, net 0.3% 0.1%
Income (loss) before taxes and minority interest -0.4% 1.4%
Income taxes -0.2% 0.6%
Income (loss) before minority interest -0.2% 0.8%
Minority interest 0.1% 0.1%

Net income (loss)

-0.1% 0.9%
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)

May 5,
2007

April 29,
2006

February 3,
2007

ASSETS
Current assets:
Cash and cash equivalents $ 120,676  57,616  348,767 
Receivables, net 103,167  97,288  100,467 
Merchandise inventories 1,378,186  1,366,480  1,354,580 
Prepaid expenses and other current assets 124,188  77,087  118,626 
Total current assets 1,726,217  1,598,471  1,922,440 
Property and equipment:
Land and land improvements 3,247  3,247  3,247 
Buildings and leasehold improvements 991,706  983,603  990,058 
Fixtures and equipment 1,306,701  1,199,796  1,310,026 
2,301,654  2,186,646  2,303,331 
Less accumulated depreciation and amortization 1,513,775  1,392,324  1,497,275 
Net property and equipment 787,879  794,322  806,056 
Goodwill 258,619  262,681  259,683 
Intangible assets, net 90,541  93,110  91,176 
Deferred taxes 104,555  114,720  104,103 
Other noncurrent assets 14,230  24,325  13,340 
Total assets $ 2,982,041  2,887,629  3,196,798 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 752,017  768,591  792,977 
Accrued liabilities 558,129  540,544  704,021 
Total current liabilities 1,310,146  1,309,135  1,496,998 
Deferred taxes 160,273  157,344  160,273 
Other long-term liabilities 364,739  363,294  364,002 
Minority interest 8,750  9,121  10,660 
Shareholders' equity:
Common stock; $.001 par value; 300,000 shares authorized; 85,113, 84,180 and 84,608 shares issued, respectively
85  84  85 
Additional paid-in capital 1,181,925  1,116,859  1,169,167 
Accumulated other comprehensive loss (6,979) (8,965) (7,086)
Retained earnings 588,739  512,617  600,404 
Treasury stock, at cost, 20,213, 18,843 and 19,520 shares, respectively
(625,637) (571,860) (597,705)
Total shareholders' equity 1,138,133  1,048,735  1,164,865 
Commitments and contingencies
Total liabilities and shareholders' equity $ 2,982,041  2,887,629  3,196,798 
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