NEW YORK--(BUSINESS WIRE)--November 20, 2008--Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported sales and earnings for the third quarter ended November 1, 2008. In addition, the company also announced that its Board of Directors declared a quarterly cash dividend of $0.25 per share for stockholders of record at the close of business on December 10, 2008, payable on December 31, 2008.

Sales for the third quarter were $1.1 billion, a 4.4% decrease compared to the prior year. Barnes & Noble store sales decreased 4.4% to $971 million, with comparable store sales decreasing 7.4% for the quarter. Barnes & Noble.com sales were $109 million for the quarter, a 2.0% comparable sales increase compared to the prior year.

Bestselling titles during the quarter included Stieg Larsson’s The Girl with the Dragon Tattoo, Alice Schroeder’s The Snowball, Thomas L. Friedman’s Hot, Flat and Crowded, Maya Angelou’s Letter to My Daughter and Vince Flynn’s Extreme Measures.

The third quarter net loss was $18.4 million or $0.34 per share. Included in the third quarter results was a non-cash after-tax impairment charge of $7.0 million, or $0.13 per share, to reduce the asset carrying value of certain store locations in accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” Excluding this charge, the third quarter net loss was $0.21 per share. Last year, the company recorded an after-tax store impairment charge of $3.5 million in the fourth quarter.

For the thirty-nine weeks ended November 1, 2008, the company had a net loss of $5.2 million as compared to net income of $20.8 million in the prior year. The net loss includes the third quarter charge noted above as well as a $5.0 million after-tax charge from the first quarter relating to a tax settlement. Excluding these charges, the company achieved net income of $6.8 million year-to-date.

“A significant drop off in customer traffic and consumer spending impacted our business in the third quarter," said Steve Riggio, chief executive officer of Barnes & Noble, Inc. “In a challenging environment with a comparable store sales decline of 4.6% this year, the company has aggressively managed expenses to operate profitably. Furthermore, the company is taking measures to reduce expenses for the balance of this year and next.”

“On a positive note,” continued Steve Riggio, “our gross margins continue to hold up well. We have scrupulously avoided driving unprofitable top line sales growth with additional coupon promotions and extra discounting. Additionally, the company remains focused on producing cash flow. We are managing our working capital efficiently, which is evident in the reduction of $107 million of inventory compared to last year. The company expects to have no borrowings at year end under its $850 million revolving credit facility. Maintaining a strong balance sheet remains a major priority in this negative economic cycle.”

While it is difficult to forecast sales with any certainty in the current retail environment, the company is reducing its full year sales and earnings forecasts based on the negative sales trends to date.

For the fourth quarter, the company expects comparable store sales at Barnes & Noble stores to decline 6% to 9%. Fourth quarter earnings per share is expected to be in a range of $1.40 to $1.70. For the full year, the company now expects comparable store sales at Barnes & Noble stores to decline 5% to 6%. Full year earnings per share is expected to be in a range of $1.30 to $1.60, compared to previous guidance of $1.70 to $1.90.

As of November 1, 2008, the company operated 728 Barnes & Noble stores and 71 B. Dalton stores. During the third quarter, nine Barnes & Noble stores were opened and four were closed. Two B. Dalton stores were closed 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, November 20, 2008, and is accessible at www.barnesandnobleinc.com/webcasts. The call will also be archived at www.earnings.com for one year.

Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller and a Fortune 500 company, operates 799 bookstores in 50 states. The company is the nation’s top bookseller in quality, and for the fifth year in a row, the top bookseller brand, as determined by a combination of the brand’s performance on 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 Web’s largest e-commerce sites.

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

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, general economic and market conditions, decreased consumer demand for the company’s products, possible disruptions in the company’s computer or telephone systems, possible risks associated with data privacy and information security, 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 company’s online and other initiatives, the performance and successful integration of acquired businesses, the success of the company’s strategic investments, unanticipated increases in merchandise or occupancy costs, unanticipated adverse litigation results or effects, the results or effects of any governmental review of the company’s stock option practices, product shortages, and other factors which may be outside of the company’s control. Please refer to the company’s 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 1, 2008			November 3, 2007		November 1, 2008		November 3, 2007

Sales	$	1,123,368		1,175,521		3,505,277		3,565,134
Cost of sales and occupancy		787,142		820,567		2,447,074		2,514,412
Gross profit		336,226		354,954		1,058,203		1,050,722
Selling and administrative expenses		318,878		303,125		929,211		902,342
Depreciation and amortization		45,032		41,870		130,574		128,808
Pre-opening expenses		3,310		5,657		11,013		9,293
Operating profit (loss)		(30,994	)	4,302		(12,595	)	10,279
Interest income (expense), net		(1,500	)	848		(1,676	)	5,543
Income (loss) before taxes and minority interest		(32,494	)	5,150		(14,271	)	15,822
Income taxes		(12,981	)	2,060		(5,667	)	(1,671	)
Income (loss) before minority interest		(19,513	)	3,090		(8,604	)	17,493
Minority interest		1,096		1,287		3,372		3,265
Net income (loss)	$	(18,417	)	4,377		(5,232	)	20,758

Income (loss) per common share:
Basic	$	(0.34	)	0.07		(0.09	)	0.32
Diluted	$	(0.34	)	0.07		(0.09	)	0.31

Weighted average common shares outstanding
Basic		54,410		63,006		55,409		64,529
Diluted		54,410		66,131		55,409		68,037

Percentage of sales:
Sales		100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales and occupancy		70.1	%	69.8	%	69.8	%	70.5	%
Gross profit		29.9	%	30.2	%	30.2	%	29.5	%
Selling and administrative expenses		28.4	%	25.8	%	26.5	%	25.3	%
Depreciation and amortization		4.0	%	3.6	%	3.7	%	3.6	%
Pre-opening expenses		0.3	%	0.5	%	0.3	%	0.3	%
Operating profit (loss)		-2.8	%	0.4	%	-0.4	%	0.3	%
Interest income (expense), net		-0.1	%	0.1	%	0.0	%	0.2	%
Income (loss) before taxes and minority interest		-2.9	%	0.4	%	-0.4	%	0.4	%
Income taxes		-1.2	%	0.2	%	-0.2	%	0.0	%
Income (loss) before minority interest		-1.7	%	0.3	%	-0.2	%	0.5	%
Minority interest		0.1	%	0.1	%	0.1	%	0.1	%
Net income (loss)		-1.6	%	0.4	%	-0.1	%	0.6	%

BARNES & NOBLE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)

	November 1, 2008			November 3, 2007		February 2, 2008

ASSETS
Current assets:
Cash and cash equivalents	$	16,830		20,219		361,047
Receivables, net		99,277		109,722		112,199
Merchandise inventories		1,558,101		1,665,533		1,366,858
Prepaid expenses and other current assets		128,441		126,770		125,577
Total current assets		1,802,649		1,922,244		1,965,681

Property and equipment:
Land and land improvements		9,324		3,247		3,247
Buildings and leasehold improvements		1,100,351		1,038,416		1,055,870
Fixtures and equipment		1,387,569		1,295,887		1,341,568
		2,497,244		2,337,550		2,400,685
Less accumulated depreciation and amortization		1,658,314		1,526,831		1,576,052
Net property and equipment		838,930		810,719		824,633

Goodwill		251,224		256,594		255,290
Intangible assets, net		84,580		89,087		87,987
Deferred taxes		103,134		104,384		102,633
Other noncurrent assets		10,812		11,812		13,602
Total assets	$	3,091,329		3,194,840		3,249,826

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	943,703		1,055,151		854,671
Accrued liabilities		593,369		576,193		735,496
Total current liabilities		1,537,072		1,631,344		1,590,167

Long-term debt		126,500		24,600		-
Deferred taxes		173,496		160,273		173,496
Other long-term liabilities		392,854		382,663		399,390

Minority interest		7,832		6,563		12,053

Shareholders' equity:
Common stock; $.001 par value; 300,000 shares authorized; 87,637, 86,500 and 86,754 shares issued, respectively		88		86		87
Additional paid-in capital		1,257,744		1,222,362		1,233,343
Accumulated other comprehensive loss		(11,044	)	(6,673	)	(9,523	)
Retained earnings		654,231		591,260		696,861
Treasury stock, at cost, 33,061, 25,546 and 26,461 shares, respectively		(1,047,444	)	(817,638	)	(846,048	)
Total shareholders' equity		853,575		989,397		1,074,720
Commitments and contingencies		-		-		-
Total liabilities and shareholders' equity	$	3,091,329		3,194,840		3,249,826

CONTACT:
Barnes & Noble, Inc.
Media:
Mary Ellen Keating, 212-633-3323
Senior Vice President
Corporate Communications
mkeating@bn.com
or
Investors:
Barnes & Noble, Inc.
Joseph J. Lombardi, 212-633-3215
Chief Financial Officer
jlombardi@bn.com