Debt and Financing - The company has a credit facility with a committed principal amount of $400,000, with an option to request an increase of up to $100,000[78]. - As of July 30, 2022, the company had outstanding borrowings of $230,300, comprised of $190,300 under the Credit Facility and $40,000 under the FILO Facility[78]. - During the 13 weeks ended July 30, 2022, the company borrowed $117,200 and repaid $112,600 under the Credit Agreement[78]. - The Term Loan Credit Agreement provides for term loans of $30,000, with an interest rate of 11.25% and a maturity date of June 7, 2024[79]. - The company incurred debt issuance costs totaling $1,909 related to the Term Loan Credit Agreement during the 13 weeks ended July 30, 2022[81]. - As of July 30, 2022, the company had outstanding borrowings of $260.3 million under the Credit Agreement and $203.7 million under the Term Loan Agreement[160]. Lease and Restructuring - Net lease expense for the 13 weeks ended July 30, 2022, was $38,045, an increase from $28,075 for the same period in 2021[85]. - The total lease payments as of July 30, 2022, amounted to $390,823, with operating lease liabilities at period end of $346,994[85]. - The weighted average remaining lease term as of July 30, 2022, was 5.3 years, with a weighted average discount rate of 4.2%[85]. - The company recognized restructuring and other charges totaling $375 during the 13 weeks ended July 30, 2022, compared to $1,905 in the same period in 2021[86]. Sales and Revenue - Total sales for the 13 weeks ended July 30, 2022, were $263.858 million, an increase from $240.794 million for the same period in 2021, representing an increase of 9.5%[117]. - Product sales and other accounted for 95.9% of total sales, while rental income contributed 4.1% for the 13 weeks ended July 30, 2022[118]. - Retail sales increased by $26.0 million, or 12.4%, to $236.5 million during the 13 weeks ended July 30, 2022, from $210.5 million during the same period in 2021[125]. - Total course material rental income for Retail decreased by $2.1 million, or 16.2%, to $10.9 million during the 13 weeks ended July 30, 2022, from $13.0 million during the same period in 2021[128]. - Revenue for First Day models increased to $45.0 million, or 67%, compared to $27.0 million in the prior year period[128]. Expenses and Losses - The net loss for the 13 weeks ended July 30, 2022, was $52.707 million, compared to a net loss of $43.628 million for the same period in 2021[117]. - Total Selling and Administrative Expenses rose by $12.3 million, or 14.2%, to $98.5 million during the 13 weeks ended July 30, 2022, compared to $86.2 million in the same period of 2021[141]. - The operating loss for the 13 weeks ended July 30, 2022, was $(47.9) million, compared to $(40.7) million in the same period of 2021, representing an increase in the operating loss margin from (16.9)% to (18.0)%[147]. - Net interest expense increased by $1.4 million, or 55.1%, to $3.9 million during the 13 weeks ended July 30, 2022, from $2.5 million in the prior year[148]. - Free Cash Flow (non-GAAP) for the 13 weeks ended July 30, 2022, was $(41.8) million, compared to $(30.6) million for the same period in 2021, reflecting a decline of approximately 36.4%[159]. Tax and Refunds - The company recorded an income tax expense of $933 million on a pre-tax loss of $(51,774) million for the 13 weeks ended July 30, 2022, resulting in an effective tax rate of (1.8)%[94]. - The company expects to receive additional tax refunds of approximately $6,881 million following refunds of $7,842 million received in Fiscal 2022 and $15,770 million on August 29, 2022[96]. - Income tax expense for the 13 weeks ended July 30, 2022, was $0.9 million on a pre-tax loss of $(51.8) million, resulting in an effective tax rate of (1.8)%[148]. Market and Operational Challenges - The company continues to face significant price competition in the textbook and course materials market, with students being highly price sensitive[113]. - The broader macroeconomic global supply chain issues have impacted the company's ability to source textbooks and school supplies[113]. - Enrollment trends at community colleges are negatively impacted by COVID-19 concerns and a decline in the U.S. birth rate, leading to fewer students in the traditional college age group[111]. - The company faces risks associated with public health crises, including the COVID-19 pandemic, which may impact overall demand for its products and services[179]. - There is a risk of decreased college enrollment or reduced funding available for students, which could negatively affect sales[179]. Digital Strategy and Initiatives - The company aims to expand its e-commerce capabilities through a partnership with Fanatics, enhancing product assortment and digital marketing tools[99]. - The implementation of the company's digital strategy may not yield the expected growth in digital sales and profitability[179]. - The company plans to continue focusing on digital initiatives and enhancements to internal systems and its website as part of its capital expenditures strategy[159]. Inventory and Capital Expenditures - The company reported a merchandise inventory loss of $434,000 for the 13 weeks ended July 31, 2021, which was not present in the current year[156]. - Total capital expenditures for the 13 weeks ended July 30, 2022, were $9.7 million, down from $11.4 million in the same period last year, a decrease of about 14.5%[159]. Employee and Operational Risks - The company may face challenges in attracting and retaining employees, which could affect operations[179]. - Risks associated with data privacy, information security, and intellectual property could impact the company's performance[179]. - The company is subject to potential disruptions in its information technology systems due to malware, viruses, or hacking attacks[179].

Financial Data and Key Metrics Changes - Total sales for Q4 2022 were $260.8 million, up from $222.8 million in the prior year, driven by a 32.6% increase in gross comparable store sales [33] - For the full fiscal year, total sales increased by $97.5 million, benefiting from the growth of inclusive access models and more students returning to campus [36] - Consolidated non-GAAP adjusted EBITDA improved by $60.8 million to a loss of $4.8 million for the full year [39] Business Line Data and Key Metrics Changes - Retail segment sales increased significantly, with textbook sales growing over 150% to $35.1 million in Q4, and general merchandise sales increasing by 76% [34][18] - Inclusive access offerings contributed to a 2.3% increase in comparable course material sales, marking the first increase in over five years [12] - The wholesale business saw a revenue decline of 32%, with EBITDA dropping to $3.8 million [22] Market Data and Key Metrics Changes - Undergraduate enrollment declined by 4.7% in spring 2022 compared to the previous year, with a total decline of 9.4% since before the pandemic [8] - Digital course materials grew from 11% of overall course material sales in 2019 to 35% in fiscal 2022 [43] - The First Day Complete program grew to 76 stores, representing approximately 380,000 undergraduate students, with revenue increasing more than 5x to $106 million [15] Company Strategy and Development Direction - The company is focused on expanding inclusive access offerings, growing general merchandise through partnerships, and increasing digital solutions subscriber base [10][28] - The First Day Complete program aims to reverse long-term declines in course material sales by ensuring students have access to all required materials on the first day of class [13] - The company plans to continue investing in its digital solutions and enhancing store-level economics [20][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the return to traditional on-campus learning but acknowledged ongoing challenges from COVID-19 variants and declining enrollments [7][8] - The company expects significant improvement in retail business driven by new First Day Complete implementations and increased on-campus traffic [39] - Management anticipates challenges in the wholesale business due to inventory constraints and inflationary pressures [40] Other Important Information - The company restated fiscal year 2021 results by $8 million due to out-of-period adjustments, which did not impact non-GAAP EBITDA figures [31] - The First Day Complete program's revenue is expected to continue growing, with commitments from 112 campus stores for the upcoming fall semester [49] Q&A Session Summary Question: Potential for converting First Day Courseware to First Day Complete - Management indicated that they expect to see a trend of campuses converting to First Day Complete, with commitments for 112 stores representing approximately 547,000 undergraduate students [57] Question: Trends in credit hours and pricing - Management noted that pricing varies by institution and is aligned with expectations, with annual reviews to ensure the right pricing for students [60][64] Question: Factors affecting return to pre-pandemic adjusted EBITDA levels - Management highlighted the significant decline in wholesale EBITDA as a major factor, with expectations for retail growth to drive overall improvement [66][76] Question: Guidance on enrollment and wholesale EBITDA - Management confirmed that the decline in wholesale EBITDA is a key driver of the shortfall relative to pre-COVID levels, with expectations for DSS to remain stable while retail is expected to grow [75][80] Question: Prioritization of new bookstore contracts versus existing initiatives - Management emphasized a careful allocation of capital, focusing on First Day Complete and digital business growth while being cautious about opening new stores [84][86]

Retail Segment Performance - In Fiscal 2022, the Retail Segment signed contracts for 92 new physical and virtual bookstores, estimated to generate approximately $128 million in first-year annual sales[27]. - The company generated $102 million in net new business in the Retail Segment, despite pruning under-performing stores[27]. - The partnership with Fanatics and FLC has enhanced product assortment and e-commerce capabilities, driving growth in the general merchandise business[32]. - The company operates 1,427 bookstores, including 805 physical and 622 virtual locations, serving a diverse educational market[27]. - The Retail Segment offers a suite of digital content and services, including open education resources, to enhance student access and affordability[27]. - The average relationship tenure for physical bookstore management contracts is 15 years, with approximately 90% renewal rate from Fiscal 2019 to Fiscal 2022[34]. - The company transitioned over 300 stores to a Custom Store Solutions model during the pandemic, ensuring continued service to customers[30]. - In Fiscal 2022, total sales from the First Day programs increased by 91% compared to the prior year, indicating strong growth in affordable course material offerings[39]. - The company operates 73 customized cafés and 11 convenience stores at physical campus locations, adapting offerings to include more grab-and-go options[39]. - The company’s e-commerce sales for general merchandise have seen significant growth, supported by the development of a next-generation e-commerce platform launched in Fiscal 2021[39]. Digital Solutions and Services - The Digital Student Solutions (DSS) Segment includes Student Brands and bartleby, providing subscription-based writing services and study tools to students[57]. - Student Brands generates subscription revenue that is deferred and recognized over the service period, with a community of online learners across multiple digital properties[59]. - Bartleby offers various products including bartleby+, bartleby learn™, and bartleby write, providing millions of textbook solutions and 24/7 virtual writing assistance[62]. - The company leverages its physical and virtual bookstore relationships to enhance the adoption of its digital products, targeting both K-12 and higher education institutions[63]. Market Trends and Challenges - The overall economic environment, including the impact of the COVID-19 pandemic, has affected college enrollment and consumer spending patterns, leading to downward enrollment trends[69]. - The market for educational materials is undergoing significant change, with increasing costs and a shift towards online and digital platforms as alternatives to printed materials[67]. - The competitive landscape is evolving, with disintermediation trends allowing students to purchase materials directly from publishers and alternative sources, impacting traditional bookstore sales[69]. - The company faces significant competition from various digital student solutions providers, including Chegg.com and Grammarly, as well as traditional textbook vendors like Amazon[66]. - The transition to online curriculums has impacted the demand for print textbooks, leading to potential revenue declines[89]. Financial Performance - Total sales for the 52 weeks ended April 30, 2022, were $1,531,400, an increase from $1,433,890 for the 52 weeks ended May 1, 2021, representing a growth of approximately 6.8%[321]. - Gross profit for the same period was $372,760, significantly higher than $252,661 in the previous year, indicating a gross profit margin improvement[321]. - The net loss for the 52 weeks ended April 30, 2022, was $68,857, a reduction from a net loss of $139,810 in the prior year, showing a decrease in losses by approximately 50.8%[321]. - Basic and diluted loss per share improved to $(1.33) from $(2.81) year-over-year, reflecting better financial performance[321]. - Cash and cash equivalents increased to $10,388 as of April 30, 2022, compared to $8,024 as of May 1, 2021, indicating improved liquidity[326]. Employee and Workplace Initiatives - As of April 30, 2022, the company had approximately 4,600 domestic employees, including about 3,000 full-time employees and 270 full-time international employees[77]. - Approximately 64% of full-time and part-time domestic employees identify as women, and about 33% identify as ethnically diverse[81]. - The company offers a 401(k) retirement savings plan with a 100% match of employee contributions up to 4% of eligible compensation[80]. - The company has implemented safety measures in response to the COVID-19 pandemic, including increased sanitization efforts and remote work arrangements for non-retail employees[81]. - The company is focused on creating an inclusive culture and has required all employees to complete training aimed at preventing harassment and discrimination[81]. Strategic Initiatives and Future Outlook - The company anticipates that new bookstore contracts will drive future growth, while also expecting some less profitable stores to close[71]. - The strategic initiative to grow digital products and services is critical, but the company may face challenges in successful implementation and customer adoption[106]. - The company plans to pursue strategic acquisitions and partnerships to expand its business, but may encounter difficulties in identifying suitable candidates and obtaining financing[106]. - The company aims to expand its strategic opportunities through acquisitions and partnerships, enhancing its competitive position in the market[339]. Risks and Compliance - The company is investing in data protection and information technology to defend against increasing cyber-attack risks, with no material service interruptions reported to date[69]. - The company faces potential data privacy and cybersecurity risks, which could lead to legal exposure and damage to reputation if not managed properly[110]. - Changes in federal, state, local, or international laws could increase regulatory compliance requirements and operational costs for the company[119]. - The company relies on third-party web service providers, such as AWS, posing risks that could disrupt operations and impact the ability to serve customers[113]. - The company has entered into agreements with major textbook publishers to implement anti-counterfeit best practices, but may still inadvertently sell counterfeit textbooks[125].

Financial Data and Key Metrics Changes - Total sales for Q3 2022 were $402.8 million, a decrease of $8.8 million or 2.1% compared to $411.6 million in the prior year [35] - Retail sales decreased by $12.9 million or 3.3% due to lower course material sales and lower logo and emblematic revenue recognition [35] - Gross comparable store sales increased by 8.4%, with a 59.1% increase in general merchandise sales [36] Business Line Data and Key Metrics Changes - Retail segment sales decreased by $12.9 million, while DSS segment sales grew by $2.2 million or 30.9% to $9.4 million [35][39] - First Day Complete and First Day rental course materials revenue increased by 64% to $76.1 million compared to $46.4 million in the prior year [36] - General merchandise comparable sales grew by 59% during the third quarter, benefiting from the partnership with Fanatics and Lids [21] Market Data and Key Metrics Changes - The wholesale segment saw a decrease of $2.4 million or 6.1% to $37 million, primarily due to COVID-19 related supply constraints [38] - The overall gross margin rate for the quarter was 21.6%, compared to 17.2% in the prior year, with gross profit increasing by 23.2% to $87 million [39] Company Strategy and Development Direction - The company is focused on enhancing its digital offerings and partnerships, particularly with First Day Complete and Bartleby, to meet the evolving needs of students and institutions [16][18] - The strategic partnership with Fanatics and Lids is expected to drive growth in general merchandise sales and improve operational efficiencies [22][24] - The company aims to adapt to a more flexible, student-centric model in higher education, addressing broader student needs beyond academics [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing COVID-related challenges but expressed optimism about returning to a more normal operating environment [31] - The company expects positive comps from the return of in-person events and activities, which should benefit sales [32] - Management indicated that while fiscal 2023 non-GAAP adjusted EBITDA is expected to improve, it will likely remain below pre-COVID levels due to inflationary pressures and supply chain issues [43] Other Important Information - The company plans to provide more specifics on expected enrollment growth for First Day Complete in connection with the year-end earnings release in June [18] - The partnership with Billie Jean King Enterprises aims to enhance diversity, equity, and inclusion initiatives within the company [30] Q&A Session Summary Question: What uplift is seen from the Fanatics Lids partnership? - Management noted a 59% increase in comp store general merchandise sales, attributing it to improved in-store assortment and online benefits [44][46] Question: Why might margin accretive businesses not translate to profitability? - Management highlighted concerns about inflation affecting costs and the need to remain competitive in a digital environment [50][52] Question: How is the Delgado partnership expected to scale? - The partnership is focused on providing personalized support to students, with a scalable framework being developed for future implementations [82] Question: What is the impact of revenue deferrals on Q3 results? - Approximately $25 million of revenue was deferred to the fourth quarter due to delayed school openings [75]

Financial Performance - The ongoing COVID-19 pandemic has significantly negatively impacted the company's business, resulting in an unprecedented material decline in revenue[35] - Total sales for the 13 weeks ended January 29, 2022, were $402,798, a decrease of 2% from $411,613 in the same period last year[56] - Retail total sales for the 39 weeks ended January 29, 2022, were $1,194,161, up from $1,122,959 in the prior year, reflecting a growth of approximately 6.4%[56] - The company reported a net loss of $36.8 million for the quarter, an improvement from a net loss of $48.3 million in the same quarter last year[126] - For the 39 weeks ended January 29, 2022, the net loss was $(58.6) million, an improvement from $(87.4) million in the prior year, indicating a 33.0% reduction in losses[172] Revenue Recognition - Revenue from the rental of physical textbooks is deferred and recognized over the rental period, typically for a single semester[45] - The company expects to recognize $51,125 of deferred revenue within the next 12 months, indicating anticipated revenue recognition from advanced payments[60] - The company recognized commission revenue for logo and emblematic merchandise sales on a net basis starting April 4, 2021, impacting sales recognition compared to prior periods[137] Inventory and Cost of Sales - The company experienced a merchandise inventory loss of $10,262,000 from the sale of logo and emblematic general merchandise inventory during the 52 weeks ended May 1, 2021[41] - The company reported a merchandise inventory loss of $434,000 in the Retail Segment for the 39 weeks ended January 29, 2022[71] - The company’s cost of sales includes merchandise costs, textbook rental amortization, and warehouse costs related to inventory management[48] Seasonal Trends - The company’s business is highly seasonal, with sales generally highest in the second and third fiscal quarters[38] - The business is highly seasonal, with sales typically peaking in the second and third fiscal quarters[118] Impairment and Losses - For the 13 weeks ended January 29, 2022, the company recognized a non-cash impairment loss of $6,411, compared to an impairment loss of $27,630 for the same period in the prior year[53] - An impairment loss of $6.4 million was recognized for certain store-level long-lived assets during the 13 weeks ended January 29, 2022[82] - The company incurred an impairment loss of $6.4 million during the 13 weeks ended January 29, 2022, compared to $27.6 million in the prior year[176] Operating Expenses - Total selling and administrative expenses for the 13 weeks ended January 29, 2022, rose by $8.8 million, or 9.4%, to $101.5 million, compared to $92.7 million in the same period of 2021[157] - Selling and administrative expenses increased to 25.2% of total sales for the 13 weeks ended January 29, 2022, compared to 22.5% in the same period of 2021[128] Cash Flow and Financing - Cash flows from operating activities for the 39 weeks ended January 29, 2022, were $7.9 million, a decrease of $33.3 million compared to $41.2 million for the same period in 2021[188] - The company had $200.4 million outstanding borrowings under the Credit Agreement as of January 29, 2022[184] - The company has a credit facility with a committed principal amount of $400,000, with an option to request an increase of up to $100,000[87] Taxation - The effective income tax rate for the 39 weeks ended January 29, 2022, was (1.4)%, compared to 28.8% for the same period in 2021[170] - The company recorded an income tax expense of $0.6 million on a pre-tax loss of $(36.2) million for the 13 weeks ended January 29, 2022[170] Strategic Initiatives - The company expects gross general merchandise sales to increase over the long term, driven by evolving product assortments and enhanced e-commerce capabilities through the partnership with Fanatics[107] - The company indicated plans for market expansion and new product development in the upcoming quarters[128] Risks and Challenges - The ongoing impact of COVID-19 continues to affect enrollment trends and consumer spending patterns, particularly in community colleges[119] - The company faces risks related to public health crises, such as the COVID-19 pandemic, which could impact demand for its products and services[202] - There is a potential decline in college enrollment and decreased funding available for students, which may adversely affect revenues[202] - The company is exposed to risks associated with technological changes and data privacy, which could impact its operations[202]

Financial Data and Key Metrics Changes - Total sales for Q2 2022 were $627 million, an increase of $31.5 million or 5.3% compared to $595.5 million in the prior year [21] - The retail segment saw a $32.4 million increase, while the wholesale segment decreased by $14.7 million [21] - The consolidated gross margin rate improved to 23.2% from 19.4% in the prior year [26] - Selling and administrative expenses increased by $15.9 million or 17.3% due to store reopenings and increased staffing [27] - Cash balance at the end of the quarter was $11 million, with outstanding borrowings of $183.3 million, up from $99.5 million in the prior year [28] Business Line Data and Key Metrics Changes - Retail gross comparable store sales increased by 13.2% during the quarter [21] - Revenue from First Day Complete and First Day by Course offerings increased by 80% to $96 million [22] - General merchandise sales grew by 78.3%, recovering from a 52% decline in the previous year [22] - DSS revenue grew 39% to $8.3 million, with Bartleby revenue increasing approximately 70% year-over-year [18] Market Data and Key Metrics Changes - Undergraduate enrollment declined by approximately 3% according to the National Student Clearinghouse Research Center [8] - The company experienced challenges with fewer international students and ongoing virtual class offerings at community colleges [8] Company Strategy and Development Direction - The company is focused on executing strategic initiatives that enhance competitive offerings and customer value propositions [10] - The First Day Complete program is gaining traction, with significant growth in student enrollment and positive impacts on academic outcomes [11][14] - The partnership with Fanatics and Lids is expected to enhance merchandise offerings and improve the omni-channel customer experience [15][17] Management's Comments on Operating Environment and Future Outlook - The operating environment remains challenging due to enrollment declines, labor shortages, and supply chain issues, but the company is optimistic about future improvements [9] - Management expressed confidence in the momentum of the First Day offerings and their potential to drive growth [10] - The company anticipates that the current challenges will begin to mitigate as they move into the next fiscal year [9] Other Important Information - The company operates 1,445 college, university, and K-12 school bookstores, including 794 physical bookstores and 651 virtual bookstores [28] - The Bartleby suite of solutions is designed to improve student success and outcomes, with a focus on enhancing product features and customer engagement [56] Q&A Session Summary Question: Performance of First Day Complete offering - Management is pleased with the operational execution of First Day Complete, noting that digital courseware facilitated fulfillment [31] - Financial impact is influenced by enrollments and pricing, with overall performance meeting expectations despite some challenges [32][33] Question: Sales pipeline for First Day Complete - The addition of 10 new stores for the spring semester indicates a strong sales pipeline, with optimism about future enrollments [39] Question: Impact of Fanatics and Lids partnership on merchandise sales - E-commerce sales have significantly improved with the rollout of the Fanatics platform, and management is optimistic about holiday sales performance [42] Question: Bartleby usage and adoption trends - Bartleby has seen good usage and increased metrics for paid subscribers, indicating strong customer engagement [44] Question: Future growth initiatives for Bartleby - The focus will be on enhancing product features and expanding the reach of Bartleby Plus to improve customer engagement [56]

COVID-19 Impact - The COVID-19 pandemic has significantly negatively impacted the company's business, resulting in an unprecedented material decline in revenue since Q4 Fiscal 2020[34] - The impact of COVID-19 has led to significant operational challenges, including campus store closures and uncertainty in enrollment trends[5] - The company continues to evaluate its operations in light of the ongoing COVID-19 pandemic, with uncertainty regarding enrollments and university budgets impacting business operations[34] - The company is experiencing downward enrollment trends, particularly in community colleges, which correlate with economic conditions[14] - The company experienced a significant negative impact from COVID-19, leading to campus store closures and a shift to online sales, which affected overall performance[174] Financial Performance - Total sales for the 26 weeks ended October 30, 2021, were $867,771, an increase of 8.5% compared to $799,499 for the same period in 2020[54] - Total sales for the 13 weeks ended October 30, 2021, were $626.977 million, an increase of 5.5% compared to $595.485 million for the same period in 2020[120] - Net income for the 13 weeks ended October 30, 2021, was $22.528 million, significantly higher than the net income of $7.515 million for the same period in 2020[120] - For the 26 weeks ended October 30, 2021, the net income available to common shareholders was $22,464, compared to a net loss of $(39,137) for the same period in 2020[77] - Adjusted EBITDA for the 13 weeks ended October 30, 2021, was $38.968 million, compared to $24.535 million for the same period in 2020, indicating a growth of 58.9%[120] Revenue Segments - Retail segment sales reached $819,421 for the 26 weeks ended October 30, 2021, up from $735,290 in the prior year, reflecting a growth of 11.4%[54] - The Wholesale segment's sales decreased to $66,153 for the 26 weeks ended October 30, 2021, down from $116,681 in the prior year, a decline of 43.3%[65] - The DSS segment reported sales of $16,582 for the 26 weeks ended October 30, 2021, compared to $11,819 in the same period of 2020, marking an increase of 40.3%[65] - Comparable general merchandise sales increased by 78.3%, compared to a 52.0% decline a year ago, benefiting from the return to on-campus learning[134] Inventory and Goodwill - Merchandise inventories were stated at the lower of cost or market, with a loss of $10,262 recognized on the sale of logo merchandise inventory during the 52 weeks ended May 1, 2021[39] - As of October 30, 2021, the company had $4,700 of goodwill related to its DSS reporting unit, with no impairment recognized during the quarter[48] Cash and Debt Management - As of October 30, 2021, the company reported restricted cash of $12,534, compared to $766 as of October 31, 2020, indicating a substantial increase in segregated funds[38] - The company borrowed $259,720 and repaid $254,020 under the Credit Agreement during the 26 weeks ended October 30, 2021, with outstanding borrowings of $183,300 as of that date[82] - The company has a credit facility with a committed principal amount of $400,000, which can be increased by up to $100,000[82] - As of October 30, 2021, outstanding borrowings under the Credit Facility amounted to $183.3 million, with total borrowings of $259.7 million and repayments of $254.0 million during the 26 weeks[180] Operational Metrics - The company has 1,445 bookstores, including 794 physical and 651 virtual bookstores, enhancing its market presence[59] - The company opened 76 new stores and closed 48 stores during the 26 weeks ended October 30, 2021, ending with a total of 1,445 stores[131] - The company’s fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to the last day of April, affecting the comparability of results across periods[35] Expenses and Charges - Selling and administrative expenses as a percentage of total sales increased to 17.2% for the 13 weeks ended October 30, 2021, from 15.4% in the prior year[121] - The company recognized restructuring and other charges totaling $3,739 during the 26 weeks ended October 30, 2021, compared to $9,058 for the same period in 2020, indicating a decrease of 58.8%[87] - Total compensation expense for long-term incentive awards was $3,930 for the 13 weeks ended October 30, 2021, compared to $1,404 for the same period in 2020, reflecting an increase of 179.0%[93] Tax and Refunds - The company expects to receive additional tax refunds of approximately $22.6 million following a $7.8 million refund received in the second quarter of Fiscal 2022[183] - The company recorded an income tax benefit of $(203) on pre-tax income of $22,325 during the 13 weeks ended October 30, 2021, resulting in an effective tax rate of (0.9)%[95] Non-GAAP Measures - The company emphasized the importance of non-GAAP measures like Adjusted EBITDA for internal performance evaluation and operational management[164] - The company plans to continue using non-GAAP measures to provide a clearer picture of ongoing operational performance and cash flow management[164]

Financial Data and Key Metrics Changes - Total sales for Q1 2022 were $240.8 million, an increase of $36.8 million or 18% compared to $204 million in Q1 2021 [42] - The consolidated gross margin rate improved to 24.9% from 15.1% in the prior year, driven by a favorable sales mix and lower inventory reserves [47] - Selling and administrative expenses increased by $16.2 million or 23.1% due to the reopening of stores and bringing back employees [48] Business Line Data and Key Metrics Changes - Retail segment sales increased by $51.7 million, with comparable store sales rising by 49.8%, including a 21.9% increase in textbook sales and a 118.4% increase in general merchandise [42][43] - DSS sales grew by $2.4 million or 41.4% to $8.3 million, attributed to increased subscribers for bartleby and Student Brands [30][47] Market Data and Key Metrics Changes - The First Day Complete model is now offered at institutions with undergraduate enrollment of over 300,000 students, up from 43,000 students last fall, indicating a year-over-year growth multiple of approximately seven times [22] - The partnership with Fanatics and Lids is expected to enhance product assortment and improve omnichannel experiences, potentially increasing sales to alumni and fans [24][28] Company Strategy and Development Direction - The company is focusing on enhancing course material delivery solutions through inclusive access models to improve student outcomes [12][22] - Strategic partnerships with Fanatics and Lids aim to grow sales and improve the value proposition for campus partners [25][28] - Continued investment in digital offerings like bartleby and the introduction of new features such as Math Solver are part of the strategy to meet evolving student needs [33][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming fall semester, anticipating a rebound in in-person classes and campus activities [7][8] - The company is closely monitoring the impact of COVID-19 variants but remains confident in its ability to adapt and serve campus partners [39][81] - There is a strong demand for general merchandise, and management is focused on ensuring adequate inventory to meet this demand [81][86] Other Important Information - The company operates 1,429 college, university, and K-12 school bookstores, including 784 physical bookstores and 645 virtual bookstores [49] - The cash balance at the end of the quarter was $7.6 million, with outstanding borrowings of $203.7 million, showing an improvement from the previous year [49] Q&A Session Summary Question: What are the take rates for First Day Complete from students returning to campus? - Management noted strong student adoption and fulfillment across 65 campus stores supporting First Day Complete, with many institutions including fees in tuition, leading to high adoption rates [54][56] Question: How is the Fanatics and Lids partnership impacting in-store merchandising? - The partnership has improved the quality and breadth of product assortments in stores, leading to a more appealing retail experience [72][74] Question: What is the outlook for profitability as campus partners return to normal operations? - Management indicated a widespread return to in-person learning, with a focus on meeting demand for general merchandise and ensuring supply chain stability [78][81]

Financial Performance - Total sales for the 13 weeks ended July 31, 2021, were $240.794 million, an increase from $204.014 million for the same period in 2020, representing a growth of approximately 18%[60]. - Retail segment sales reached $210.469 million, up from $158.776 million in the prior year, indicating a significant increase of about 32.5%[61]. - Wholesale segment sales decreased to $44.484 million from $80.294 million, reflecting a decline of approximately 44.6%[61]. - DSS segment sales increased to $8.303 million from $5.872 million, marking a growth of around 41.1%[61]. - Gross profit for the total sales was $60.029 million, compared to $30.862 million in the previous year, showing an increase of approximately 94.5%[61]. - The operating loss for the total was $41.453 million, an improvement from a loss of $58.915 million in the same period last year[61]. - The net loss available to common shareholders for the 13 weeks ended July 31, 2021, was $44.346 million, compared to a loss of $46.652 million in the prior year[65]. - Basic and diluted loss per share for the period was $(0.86), slightly improved from $(0.96) in the same period last year[65]. - Adjusted EBITDA for the 13 weeks ended July 31, 2021, was $(24.5) million, an improvement from $(38.0) million in the prior year[105]. - The company recorded a net loss of $(44.3) million during the 13 weeks ended July 31, 2021, compared to a net loss of $(46.7) million in the same period last year[138]. Inventory and Assets - The company reported a merchandise inventory loss of $10,262 from the sale of logo and emblematic general merchandise inventory during the 52 weeks ended May 1, 2021[37]. - As of July 31, 2021, the company had $4,700 of goodwill related to its DSS reporting unit, with no impairment recognized during the quarter[46]. - The company’s other long-lived assets included property and equipment valued at $289,102 as of July 31, 2021[46]. - As of July 31, 2021, other long-term liabilities included $25,335 related to the long-term tax payable associated with the LIFO reserve[47]. Revenue Recognition - Revenue from the rental of physical textbooks is deferred and recognized over the rental period, typically for a single semester[42]. - The company’s retail product revenue is recognized when the customer takes physical possession of the products, either at the point of sale or upon receipt[42]. - The company’s subscription-based revenue is deferred and recognized based on the passage of time over the subscription period, with the majority being one month in duration[42]. Operational Changes and Challenges - The business has been significantly negatively impacted by the COVID-19 pandemic, resulting in an unprecedented material decline in revenue[33]. - The company expects many negative trends impacting results, such as fewer students returning to campus, to be marginally reversed in the upcoming Fall semester[46]. - The company has experienced significant negative impacts from COVID-19, including campus store closures and shifts to online learning[91]. - Enrollment trends are declining, influenced by economic conditions and the COVID-19 pandemic, which may affect future sales[99]. - The company faces risks associated with COVID-19, including impacts on demand and operations, as well as supplier operations[164]. Strategic Initiatives - The company expects long-term growth in general merchandise sales, driven by evolving product assortments and enhanced e-commerce capabilities through the FLC Partnership[86]. - The FLC Partnership enhances product assortment and e-commerce capabilities, allowing for improved access to sales performance data[88]. - The company recognizes commission revenue on logo and emblematic merchandise sales on a net basis due to the FLC Partnership, contrasting with the previous gross basis[90]. Expenses and Liabilities - Total selling and administrative expenses increased by $16.2 million, or 23.1%, to $86.2 million during the 13 weeks ended July 31, 2021, compared to $70.0 million in the same period last year[128]. - Retail segment selling and administrative expenses rose by $11.4 million, or 20.0%, to $68.4 million, primarily due to a $12.1 million increase in stores payroll and operating expenses[129]. - The company recognized total employee benefit expense of $44 for the 13 weeks ended July 31, 2021, compared to $73 for the same period in 2020[79]. - The company recorded a liability of $6,317 for cash-settled phantom share unit awards as of July 31, 2021, which is reflected in accrued liabilities and other long-term liabilities[70]. Cash Flow and Financing - Cash payments for lease liabilities within operating activities were $27,378 for the 13 weeks ended July 31, 2021, compared to $16,676 for the same period in 2020[76]. - The company anticipates future capital requirements will depend on various factors, including economic conditions and potential acquisitions[150]. - The company authorized a stock repurchase program of up to $50 million, with approximately $26.7 million remaining available as of July 31, 2021[159]. - During the 13 weeks ended July 31, 2021, the company borrowed $71,720 and repaid $45,620 under the Credit Agreement, with outstanding borrowings of $203,700 as of July 31, 2021[71]. Market Conditions - The market for educational materials is undergoing significant changes, with increasing competition from alternative sources and digital platforms[99]. - The company is exposed to risks related to a decline in college enrollment and decreased funding available for students[164]. - The strategic objectives and anticipated synergies from various acquisitions may not be fully realized or may take longer than expected[164].

Business Operations - Barnes & Noble Education operates 1,417 physical and virtual bookstores, serving over 6 million students[20]. - The Retail Segment signed contracts for 98 new physical and virtual bookstores, estimated to generate approximately $103 million in first-year annual sales[24]. - The company operates 148 True Spirit e-commerce websites and has seen significant growth in general merchandise e-commerce sales, which are expected to be further bolstered through the FLC Partnership[32]. - The Wholesale Segment has a large inventory of approximately 280,000 textbook titles and processes over 21 million textbooks annually through a highly automated distribution facility[44]. - The company operates 769 physical campus stores, with 104 contracts expiring in 2022 and 432 contracts expiring in 2027 and later[122]. - The company has transitioned more than 300 stores to a Custom Store Solutions model, allowing direct-to-student fulfillment of course material orders during COVID-19[43]. - The company operates 77 customized cafés and 12 stand-alone convenience stores at physical campus locations, adapting offerings to meet changing market needs[32]. Financial Performance - Total sales for the fiscal year ended May 1, 2021, were $1,433.89 million, a decrease of 22.5% from $1,851.06 million in the previous year[275]. - The company reported a net loss of $131.79 million for the fiscal year ended May 1, 2021, compared to a net loss of $38.25 million in the prior year, representing an increase in loss of 244.5%[275]. - Gross profit for the fiscal year ended May 1, 2021, was $252.66 million, down 42.9% from $442.55 million in the previous year[275]. - Selling and administrative expenses decreased to $338.28 million in the fiscal year ended May 1, 2021, from $404.47 million in the previous year, a reduction of 16.3%[275]. - The company experienced a significant decline in rental income, which fell to $134.15 million from $179.86 million, a decrease of 25.4%[275]. - Total current assets decreased from $584,919 thousand as of May 2, 2020, to $500,833 thousand as of May 1, 2021, representing a decline of approximately 14.4%[280]. - Stockholders' equity decreased from $417,751 thousand as of May 2, 2020, to $301,034 thousand as of May 1, 2021, a decline of approximately 28.0%[280]. Digital Solutions and Innovations - The company experienced a 70% growth in new subscribers for its bartleby suite of products and services during Fiscal 2021, totaling over 300,000 new subscribers[20]. - The Digital Student Solutions segment includes operations of Student Brands, LLC, and bartleby, providing direct-to-student subscription-based services[51]. - Bartleby offers over 2 million textbook solutions and over 3 million question and answer solutions, enhancing the student learning experience[54]. - The company has partnered with major publishers like Cengage Learning, McGraw-Hill Education, and Pearson to provide digital content through the First Day platform[30]. - The company entered into an agreement with Wolfram|Alpha to develop a math solver for the bartleby suite, enhancing its digital offerings[52]. - The company continues to invest in digital content and solutions to complement its bookstore and wholesale businesses, leveraging its physical presence on campuses[51]. Market Trends and Competition - The overall economic environment and college enrollment trends significantly impact the company's business performance[61]. - The company faces competition from various vendors, including Amazon and Chegg.com, in the digital student solutions market[60]. - The company faces significant competition from various college bookstore operators and educational content providers, including Follett Corporation and Amazon, impacting pricing strategies and market share[85]. - Approximately 30% of college and university affiliated bookstores in the U.S. are operated by their respective institutions, indicating a trend towards outsourcing[24]. COVID-19 Impact - The COVID-19 pandemic has materially and adversely impacted the company's business and revenues, particularly in the fourth quarter of 2020[82]. - The company has implemented safety measures in response to COVID-19, including increased sanitization efforts and remote work arrangements for non-retail employees[75]. - The COVID-19 pandemic significantly impacted revenue, with ongoing uncertainty regarding its effects on enrollments and university budgets[294]. - The company has faced risks related to the COVID-19 pandemic, including potential reductions in government funding for education impacting demand for its products and services[82]. Employee and Organizational Structure - As of May 1, 2021, the company had 4,095 domestic employees, including approximately 2,761 full-time employees[69]. - Approximately 63% of full-time and part-time employees identify as women, and about 30% identify as ethnically diverse[74]. - The company completed an organizational restructuring in its Retail Segment, resulting in a significant number of promotions to field leadership roles[70]. - The company is focused on creating an inclusive culture, with training programs on inclusion and diversity topics planned for Fiscal 2022[74]. Regulatory and Compliance Issues - The company is subject to evolving regulations affecting online business operations, including privacy and consumer protection laws[65]. - Compliance with data privacy laws such as GDPR and CCPA may require substantial expenditures and modifications to data processing practices[109]. - The company is subject to various domestic and international laws regarding data protection, which could increase compliance costs and impact business operations[105]. Strategic Initiatives - The company expects to expand its strategic opportunities through acquisitions and partnerships, particularly in digital solutions[289]. - The company may pursue strategic acquisitions and partnerships to grow its business, but faces challenges in identifying suitable candidates and obtaining financing[99]. - The company is focusing on digital initiatives to retain and expand customer relationships, acquire new accounts, and develop higher education digital products[99]. Financial Liabilities and Assets - The company had $177.6 million of borrowings outstanding under the Credit Facility and FILO Facility as of May 1, 2021[251]. - Cash, cash equivalents, and restricted cash at the end of the period increased to $16,814 thousand from $9,008 thousand at the beginning of the period[283]. - Long-term borrowings increased from $99,700 thousand as of May 2, 2020, to $127,600 thousand as of May 1, 2021, an increase of approximately 28.0%[280]. - The company relies on proprietary technology for managing textbook inventory and distribution, which is critical for operational efficiency[113].