Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good day, everyone and welcome to the Barnes & Noble fourth quarter fiscal year 2003 earnings release conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to the Chief Financial Officer, Mr. Joseph Lombardi. Please go ahead, sir.
JOSEPH LOMBARDI, CFO, BARNES & NOBLE, INC.: Morning and welcome to Barnes & Noble's fourth quarter and year-end conference call. Joining us today are Steve Riggio, our Chief Executive Officer, Mitchell Klipper, our Chief Operating Officer and other members of the senior management team.
Before I begin, I would like to remind you that this call is covered by the Safe Harbor disclosure contained in our public documents and is the property of Barnes & Noble. It is not for rebroadcast or use by any other party without the prior written concent of Barnes & Noble.
This morning before the market opened, we released our results for the fourth quarter and full year ended January 31st, 2004. Barnes & Noble book sellers sales were $1.3 billion for the quarter, a 10% increase over last year's fourth quarter. Full-year sales increased 8% to $3.9 billion. Barnes & Noble comparable store sales increased 6.4% for the fourth quarter and 3.2% for the full year. Sales were exceptionally strong in hard cover bestsellers, DVDs, magazines and cafe.
In the quarter, we opened five Barnes & Noble stores and closed four, resulting in a total store count of 647 Barnes & Noble super stores. For all of 2003, we opened 31 and closed 12, resulting in 15.8 million total super store square footage at year end. We have closed 36 more B. Dalton stores this quarter resulting in a total B. Dalton store count of 195 at year end. Regarding store closing costs, a number of you have been asking for guidance as we do not segregate these costs from regular operations. In 2003, store closing costs reduced earnings about 5 cents per share, and is incorporated in Bookstore results.
Yesterday GameStop reported their results. Sales were $625 million for the fourth quarter, a 20% increase over the same period last year. Full year sales increased 17% to $1.6 billion, comparable store sales increased 3.9% for their quarter and .8% for the full year. GameStop opened 43 stores and closed one this quarter, ending with 1,514 stores, GameStop's added 283 stores this past year.
On January 29th, Barnes & Noble.com reported their results through December 31st. Net sales increased 4.3% for the quarter and full-year 2003 sales were $425 million. We have provided both GAAP and pro forma data in our press release. Barnes & Noble.com was accounted under the equity method of accounting through September 15th, when we only owned 38%. After our ownership increased to 75%, we consolidated their results into our numbers. What that means is on the GAAP consolidated sales line, for example , we only include Barnes & Noble.com sales in 2003 since mid-September.
On a GAAP basis, consolidated sales increased 20% for the quarter. To better allow to you understand comparative operating results, we've also provided disclosures that the companies were consolidated both years. Pro forma consolidated sales, therefore, grew 12% this quarter and 9% for the full year. Our pro forma consolidated gross profit margin for the fourth quarter improved 40 basis points to 29% from the prior year's 28.6%. Full-year pro forma margins increased 60 basis points.
For the fourth quarter, Bookseller's margins decreased 30 basis points over last year, primarily due to the extraordinary sales of bestsellers and their related discounts. For the full year, however, Bookseller margins were nearly flat with the prior year. Margins at Barnes & Noble.com for the fourth quarter were 24.5%, a significant increase from 21.6% in the prior year. Full year margins increased to 24.5% from 22.6%. The substantial gross margin improvement resulted from three main factors; increased efficiencies realized from internal fulfillment operations, the change in the model for used and out-of-print books, as well as less promotional activity during the holiday season.
GameStop reported their gross margins increased 70 basis points for both the quarter and full year. The margin improvement is attributable to continued definement in its promotional marketing, as well as improved in-store merchandising to generate a more favorable merchandise mix.
On the SG&A front, consolidated pro forma expenses were 50 basis points lower and were 15.4% versus 15.9% in the fourth quarter, primarily due to the higher sales volume and well-controlled expense management. Full-year SG&A rates were flat on a consolidated basis. The SG&A rate at Barnes & Noble Booksellers came in 90 basis points better than last year during the fourth quarter due to the sales leverage. The full year SG&A rate improved slightly versus the prior year.
Barnes & Noble.com had an even larger improvement in its SG&A, total operating expenses decreased 10.9% quarter over quarter and 12.5% year over year. GameStop's SG&A rates were slightly higher than last year as a percent of sales. Pro forma operating profit on a consolidated basis, therefore, increased as a percent of sales from 10.2% to 11.5% this quarter. The Bookstores, GameStop and BNBN all achieved higher operating profitability as a percent of sales. Barnes & Noble.com had the added distinction of having a small EBITDA profit in the fourth quarter, which was their stated goal.
Our consolidated income tax rate was 40.75% for fiscal 2003, compared to 40.25% in 2002. We are also using a 40.75% …