November 20, 2007 at 08:30 AM EST
Barnes & Noble Reports Third Quarter Financial Results:
Comparable Store Sales Increase 2.6% Increases Full Year Guidance Declares Quarterly Dividend

Barnes & Noble, Inc. (NYSE: BKS), the worlds largest bookseller, today reported sales and earnings for the third quarter ended November 3, 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 December 7, 2007, payable on December 28, 2007.

Sales for the third quarter increased 5.7% to $1.2 billion. Barnes & Noble store sales increased 4.5% to $1.0 billion, with comparable store sales increasing 2.6% for the quarter, at the high end of guidance for a flat to low-single digit increase. Barnes & Noble.com sales were $108.2 million for the quarter, a 14.5% comparable sales increase compared to the prior year period.

Bestselling titles during the quarter included Alan Greenspans The Age of Turbulence, John Grishams Playing for Pizza, Ken Folletts World Without End, Nicholas Sparks The Choice and Stephen Colberts I Am America (and So Can You!).

Third quarter net earnings were $4.4 million or $0.07 per share. Included in third quarter net earnings was an after tax benefit of $6.2 million, or $0.09 per share, resulting from a more favorable physical inventory shortage rate than previously estimated and accrued. Excluding this benefit, third quarter net loss per share was $1.8 million, or $0.03 per share, better than guidance of a loss of $0.06 to $0.10 per share.

The companys sales continued to perform at the higher end of expectations, due in part to strong sales of new releases and bestsellers, which combined with a better than expected gross margin rate enabled the company to outperform its third quarter earnings expectations, said Steve Riggio, chief executive officer of Barnes & Noble, Inc. In addition, we are encouraged by the sales trends at Barnes & Noble.com that began earlier this year and continued through the third quarter, in which we launched a newly designed website.

In the third quarter of 2007, the company acquired 4.9 million shares for $172.5 million under its share repurchase program. Year-to-date, the company acquired 6.0 million shares for $219.9 million under its share repurchase program. The company has $232.4 million remaining under its existing share repurchase authorization.

GUIDANCE

For the fourth quarter and full year, the company expects comparable store sales at Barnes & Noble stores to increase in the low-single digits. The company previously expected full year comparable store sales to range from flat to slightly positive.

Barnes & Noble, Inc.s fourth quarter earnings per share is expected to be in a range of $1.67 to $1.86. The company is increasing its full-year earnings per share guidance to reflect the third quarter outperformance ($0.14 per share), the benefit resulting from a reduced fully diluted share count ($0.04 per share), as well as improved net earnings on higher projected fourth quarter sales ($0.04 per share). The company now expects full-year GAAP earnings per share to be in a range of $1.91 to $2.09, compared to previous guidance of $1.69 to $1.87.

As of November 3, 2007, the company operated 709 Barnes & Noble stores and 92 B. Dalton stores. During the third quarter, 14 Barnes & Noble stores were opened and three were closed.

A conference call with Barnes & Noble, Inc.s senior management will be webcast beginning at 10:00 A.M. ET on Tuesday, November 20, 2007, and is accessible at www.barnesandnobleinc.com/webcasts.The call will also be archived at www.earnings.com for one year.

Barnes & Noble, Inc. will report holiday sales results on or about January 10, 2008.

ABOUT BARNES & NOBLE, INC.

Barnes & Noble, Inc. (NYSE: BKS), the world's largest bookseller and a Fortune 500 company, operates 801 bookstores in 50 states. For the fourth year in a row, the company is the nations top bookseller brand, as determined by a brands overall strength based on its combination of familiarity, quality and purchase intent, 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.

General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the companys corporate website: http://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 ended

39 weeks ended

November 3, 2007

October 28, 2006

November 3, 2007

October 28, 2006

Sales $ 1,175,521 1,111,958 3,565,134 3,382,852
Cost of sales and occupancy 820,567 780,933 2,514,412 2,363,555
Gross profit 354,954 331,025 1,050,722 1,019,297
Selling and administrative expenses 303,125 290,391 902,342 850,212
Depreciation and amortization 41,870 41,694 128,808 123,466
Pre-opening expenses 5,657 4,501 9,293 10,486
Operating profit (loss) 4,302 (5,561) 10,279 35,133
Interest income (expense), net 848 (894) 5,543 (108)
Income (loss) before taxes and minority interest 5,150 (6,455) 15,822 35,025
Income taxes 2,060 (2,630) (1,671) 14,273
Income (loss) before minority interest 3,090 (3,825) 17,493 20,752
Minority interest 1,287 1,053 3,265 3,043
Net income (loss) $ 4,377 (2,772) 20,758 23,795
Income (loss) per common share:
Basic $ 0.07 (0.04) 0.32 0.36
Diluted $ 0.07 (0.04) 0.31 0.34
Weighted average common shares outstanding
Basic 63,006 64,947 64,529 65,254
Diluted 66,131 64,947 68,037 69,244
Percentage of sales:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales and occupancy 69.8% 70.2% 70.5% 69.9%
Gross profit 30.2% 29.8% 29.5% 30.1%
Selling and administrative expenses 25.8% 26.1% 25.3% 25.1%
Depreciation and amortization 3.6% 3.7% 3.6% 3.6%
Pre-opening expenses 0.5% 0.4% 0.3% 0.3%
Operating profit (loss) 0.4% -0.5% 0.3% 1.0%
Interest income (expense), net 0.1% -0.1% 0.2% 0.0%
Income (loss) before taxes and minority interest 0.4% -0.6% 0.4% 1.0%
Income taxes 0.2% -0.2% 0.0% 0.4%
Income (loss) before minority interest 0.3% -0.3% 0.5% 0.6%
Minority interest 0.1% 0.1% 0.1% 0.1%
Net income (loss) 0.4% -0.2% 0.6% 0.7%
BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)

November 3, 2007

October 28,

2006

February 3, 2007

ASSETS
Current assets:
Cash and cash equivalents $ 20,219 19,888 348,767
Receivables, net 109,722 129,053 100,467
Merchandise inventories 1,665,533 1,639,013 1,354,580
Prepaid expenses and other current assets 126,770 80,363 118,626
Total current assets 1,922,244 1,868,317 1,922,440
Property and equipment:
Land and land improvements 3,247 3,247 3,247
Buildings and leasehold improvements 1,038,416 982,849 990,058
Fixtures and equipment 1,295,887 1,284,023 1,310,026
2,337,550 2,270,119 2,303,331
Less accumulated depreciation and amortization 1,526,831 1,464,750 1,497,275
Net property and equipment 810,719 805,369 806,056
Goodwill 256,594 260,637 259,683
Intangible assets, net 89,087 91,814 91,176
Deferred taxes 104,384 115,400 104,103
Other noncurrent assets 11,812 11,943 13,340
Total assets $ 3,194,840 3,153,480 3,196,798
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,055,151 1,016,564 792,977
Accrued liabilities 576,193 515,516 696,666
Total current liabilities 1,631,344 1,532,080 1,489,643

Long-term debt

24,600 34,100 -
Deferred taxes 160,273 158,035 160,273
Other long-term liabilities 382,663 388,972 371,357
Minority interest 6,563 5,829 10,660
Shareholders' equity:

Common stock; $.001 par value; 300,000 shares authorized; 86,500, 84,528 and 84,608 shares issued, respectively

86 85 85
Additional paid-in capital 1,222,362 1,134,306 1,169,167
Accumulated other comprehensive loss (6,673) (8,713) (7,086)
Retained earnings 591,260 506,474 600,404

Treasury stock, at cost, 25,546, 19,520 and 19,520 shares, respectively

(817,638) (597,688) (597,705)
Total shareholders' equity 989,397 1,034,464 1,164,865
Commitments and contingencies - - -
Total liabilities and shareholders' equity $ 3,194,840 3,153,480 3,196,798

Contacts:

Barnes & Noble, Inc.
Media:
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
or
Investor:
Joseph J. Lombardi, 212-633-3215
Chief Financial Officer
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