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].

Financial Data and Key Metrics Changes - Total sales for Q3 2021 were $411.6 million, down from $502.3 million in the prior year, a decrease of $90.7 million or 18.1% [28] - Retail comparable store sales declined 19.9%, with an 8.1% decline in textbook sales and a 46% decline in general merchandise [30] - Consolidated gross margin rate for the quarter was 17.2%, compared to 23.6% in the prior year [33] - Selling and administrative expenses were reduced by $13.5 million or 12.7% compared to the prior year [35] - Cash balance at the end of the quarter was $9.9 million, with outstanding borrowings of $150.8 million, up from $65.9 million in the prior year [37] Business Line Data and Key Metrics Changes - The Retail segment saw a decrease of $70.3 million in sales, while the Wholesale segment decreased by $27.5 million [28] - DSS sales grew by $0.8 million or 12% to $7.2 million, driven by a 53% increase in bartleby subscriptions [33][18] - First Day offerings grew 107% to $46.4 million during the quarter [30] Market Data and Key Metrics Changes - The Wholesale segment's net sales decreased by 41.1% to $39.5 million, primarily due to lower sales at non-BNC bookstores [32] - The retail experience remained challenged due to many campuses operating in a hybrid or remote format [12] Company Strategy and Development Direction - The company is focusing on enhancing its digital offerings and partnerships, such as the strategic omnichannel merchandising partnership with Fanatics and Lids [14][16] - The First Day Complete program is expected to continue growing, with agreements in place for 31 campus stores representing over 160,000 undergraduate enrollments [9] - The company aims to leverage its partnerships to improve customer experience and expand product selection [15][17] Management's Comments on Operating Environment and Future Outlook - Management expects the pandemic to continue impacting results for the remainder of the fiscal year but remains optimistic about future growth [24] - The company is confident in its ability to achieve EBITDA positivity in fiscal 2022, driven by increased on-campus activities and the growth of bartleby [59][60] - Management highlighted the importance of flexibility in learning models post-pandemic, which will sustain demand for digital solutions [19] Other Important Information - The company signed over $100 million in new retail contracts this fiscal year, indicating strong demand for its services [26] - A new DSS President, David Nenke, has been appointed to lead the digital retail subscription business [23] Q&A Session Summary Question: How will First Day and First Day Complete roll out to students? - All 31 campus stores will participate in First Day Complete starting in fall 2021, with ongoing efforts to secure additional agreements [42] Question: What are universities saying about plans for in-person learning? - There is optimism for more in-person learning in fall 2021, with many universities planning for in-person graduations and orientations [46] Question: How will the general merchandise business change with the Fanatics partnership? - The partnership aims to enhance product assortment and improve the customer experience, leveraging both companies' strengths [50][54] Question: What is the outlook for fiscal 2022? - The company is optimistic about achieving EBITDA positivity, driven by increased on-campus activities and growth in digital offerings [59][60] Question: What is the impact of the new DSS President on the business? - David Nenke is expected to capitalize on existing momentum and enhance the strategic direction of the bartleby product [70][72]

Financial Performance - Total sales for the 13 weeks ended January 30, 2021, were $411,613 thousand, a decrease of 18.1% compared to $502,292 thousand for the same period in 2020[124]. - Net loss for the 13 weeks ended January 30, 2021, was $(48,289) thousand, compared to a net loss of $(1,693) thousand for the same period in 2020[124]. - Adjusted EBITDA for the 13 weeks ended January 30, 2021, was $(20,782) thousand, a significant decline from $13,415 thousand for the same period in 2020[124]. - Gross margin for the 13 weeks ended January 30, 2021, was 17.2%, down from 23.6% in the same period of the previous year[125]. - Total sales decreased by $90.7 million, or 18.1%, to $411.6 million during the 13 weeks ended January 30, 2021, compared to $502.3 million during the same period in 2020[133]. - Total sales decreased by $383.1 million, or 24.0%, to $1,211.1 million during the 39 weeks ended January 30, 2021, compared to $1,594.2 million during the same period in 2020[133]. - The company reported an operating loss of $116.9 million for the 39 weeks ended January 30, 2021[134]. - The company experienced a gross profit of $220,459 thousand for the 39 weeks ended January 30, 2021, compared to $380,115 thousand for the same period in 2020, indicating a decline of about 42%[176]. Impairment and Restructuring - An impairment loss of $27,630 was recognized during the 39 weeks ended January 30, 2021, with a tax impact of $20,506, primarily related to store-level long-lived assets[89]. - Restructuring and other charges totaled $10,727 for the 39 weeks ended January 30, 2021, primarily for severance and professional service costs[90]. - The company recognized a non-cash impairment loss of $27.6 million during the 13 weeks ended January 30, 2021, primarily related to store-level long-lived assets[161]. - The company recognized restructuring and other charges totaling $1.7 million during the 13 weeks ended January 30, 2021, primarily for severance and other employee termination costs[162]. Sales and Market Trends - The company expects general merchandise sales to continue increasing over the long term, driven by evolving consumer trends and enhanced e-commerce capabilities[103]. - The COVID-19 pandemic significantly impacted operations, with many schools adopting remote learning, leading to decreased foot traffic and sales in physical stores[107]. - The company anticipates ongoing enrollment declines in higher education, which could further impact sales and financial performance[116]. - The market for educational materials is undergoing significant changes, with increased competition from alternative sources and digital platforms[116]. - The retail segment's sales for the 39 weeks ended January 30, 2021, were $1,122,959 thousand, down from $1,474,413 thousand in the same period of 2020, a decrease of approximately 24%[176]. Operational Changes - The company implemented a significant cost reduction program aimed at streamlining operations and maximizing productivity, initiated in late Fiscal 2020[179]. - The company continued to adapt its offerings to support students and institutions during the pandemic, including providing free shipping and expanded digital content[179]. - The company opened 88 new stores and closed 66 stores during the 39 weeks ended January 30, 2021, ending with a total of 1,441 stores[137]. Cash Flow and Financing - Cash flows provided by operating activities during the 39 weeks ended January 30, 2021 were $41.6 million, a decrease of $50.4 million compared to $92.0 million during the same period in 2020[184]. - Cash flows used in investing activities were $(26.0) million for the 39 weeks ended January 30, 2021, compared to $(27.3) million in the prior year, primarily due to lower capital expenditures[186]. - Cash flows used in financing activities were $(13.9) million for the 39 weeks ended January 30, 2021, a significant decrease of $55.0 million compared to $(68.9) million in the same period in 2020[187]. - As of January 30, 2021, the company had $150.8 million in outstanding borrowings under its Credit Agreement, highlighting liquidity challenges[178]. Tax and Compensation - The company recorded an income tax benefit of $(35,334) on a pre-tax loss of $(122,760) during the 39 weeks ended January 30, 2021, resulting in an effective tax rate of 28.8%[99]. - The company has a total unrecognized compensation cost related to unvested awards of $12,318 as of January 30, 2021, expected to be recognized over a weighted-average period of 2.4 years[98]. - The total compensation expense for long-term incentive awards was $5,586 for the 39 weeks ended January 30, 2021, compared to $6,000 for the same period in the previous year[98]. Legal and Compliance - The company is involved in various legal proceedings, including antitrust claims related to the sale of course materials, but does not expect these to have a material adverse effect on its financial position[100]. - The company has identified various risks including operational performance, technological changes, and data privacy issues that could impact its business[197]. - The company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level[201]. - No changes in internal control over financial reporting were identified during the third quarter that materially affected the company's reporting[202].

Financial Performance - Total sales for the 13 weeks ended October 31, 2020, were $595,485 thousand, a decrease of 22.9% compared to $772,228 thousand for the same period in 2019[121]. - Net income for the 13 weeks ended October 31, 2020, was $7,515 thousand, down from $35,931 thousand in the prior year, representing a decline of 79.1%[121]. - Adjusted EBITDA for the 13 weeks ended October 31, 2020, was $24,535 thousand, a decrease of 67.1% from $74,544 thousand in the same period of 2019[121]. - Total sales decreased by $176.7 million, or 22.9%, to $595.5 million during the 13 weeks ended October 31, 2020, compared to $772.2 million during the same period in 2019[128]. - Total sales decreased by $292.4 million, or 26.8%, to $799.5 million during the 26 weeks ended October 31, 2020, compared to $1,091.9 million during the same period in 2019[130]. - The company experienced a significant decline in adjusted earnings, reporting $(30,641) thousand for the 26 weeks ended October 31, 2020, compared to $7,759 thousand in the same period of 2019[121]. - The company reported a net income loss of $39,137,000 for the 26 weeks ended October 31, 2020, compared to a net income of $3,776,000 for the same period in 2019[171]. - The adjusted earnings (non-GAAP) for the 13 weeks ended October 31, 2020, were $11,075,000, a decrease from $37,834,000 in the prior year, representing a decline of approximately 70.7%[171]. Sales and Revenue Breakdown - Retail sales decreased by $165.2 million, or 22.3%, to $576.5 million during the 13 weeks ended October 31, 2020, compared to $741.8 million during the same period in 2019[133]. - Retail sales decreased by $281.1 million, or 27.7%, to $735.3 million during the 26 weeks ended October 31, 2020, compared to $1,016.4 million during the same period in 2019[133]. - Total sales for the Retail segment were $576,514,000, with a gross profit of $95,704,000, resulting in a gross margin of approximately 16.6%[176]. - Rental income for the 13 weeks ended October 31, 2020, was $43,653 thousand, compared to $53,685 thousand in the same period of 2019, reflecting a decrease of 18.7%[125]. - Wholesale sales decreased by $3.8 million, or 9.5%, to $36.4 million during the 13 weeks ended October 31, 2020, compared to $40.2 million in the same period in 2019[138]. - DSS total sales increased by $0.7 million, or 14.0%, to $5.9 million during the 13 weeks ended October 31, 2020, from $5.2 million in the prior year[139]. Cost and Expenses - Gross margin for the 13 weeks ended October 31, 2020, was 19.4%, down from 24.2% in the prior year, indicating a decline of 4.8 percentage points[122]. - Selling and administrative expenses as a percentage of total sales increased to 15.4% for the 13 weeks ended October 31, 2020, compared to 14.7% in the same period of 2019[122]. - Total Selling and Administrative Expenses decreased by $21.4 million, or 18.9%, to $92.0 million for the 13 weeks ended October 31, 2020, compared to $113.4 million for the same period in 2019[151]. - Retail segment selling and administrative expenses decreased by $21.2 million, or 21.5%, to $77.4 million for the 13 weeks ended October 31, 2020, primarily due to a $17.5 million decrease in stores payroll and operating expenses[152]. - Total cost of sales for the 13 weeks ended October 31, 2020, was $480,200 thousand, an increase from $585,278 thousand in the same period of 2019[125]. - Cost of sales as a percentage of sales increased to 80.6% during the 13 weeks ended October 31, 2020, compared to 75.8% during the same period in 2019[140]. Debt and Financing - The company borrowed $330,800 and repaid $406,000 under the Credit Agreement during the 26 weeks ended October 31, 2020, with $99,500 of outstanding borrowings as of that date[81]. - The company issued $4,759 in letters of credit under the Credit Facility as of October 31, 2020[81]. - As of October 31, 2020, the company had $99.5 million in outstanding borrowings under the credit facility, having borrowed $330.8 million and repaid $406.0 million during the 26 weeks[188]. - The company operates under a credit agreement with a total committed principal amount of $400 million, with an option to request an increase of up to $100 million[188]. Impact of COVID-19 - The company experienced significant impacts from COVID-19, leading to the closure of most physical campus stores and a shift to online services[2]. - Fiscal 2021 second quarter results were adversely affected by ongoing pandemic-related adjustments in learning models, with fewer students returning to campus[3]. - Enrollment trends are negatively impacted by COVID-19, with a significant reduction in U.S. economic activity and increased unemployment potentially leading to decreased enrollment[7]. - The ongoing COVID-19 pandemic significantly impacted the company's operations, with fewer students returning to campus and overall enrollment declines affecting sales[180]. - The company has temporarily suspended employer matching contributions into its 401(k) plans through the end of December 2020 due to COVID-19 related impacts[85]. Strategic Initiatives - The company is focused on expanding e-commerce capabilities and strategic partnerships to enhance value for shareholders[8]. - The company anticipates continued growth in general merchandise sales as product assortments evolve with consumer trends[6]. - The company expects new bookstore contracts to drive future growth, while also anticipating potential closures of less profitable locations[10]. - The company made continued progress in the development of its next generation e-commerce platform, which launched in Fiscal 2021[136]. - The company implemented a significant cost reduction program aimed at maximizing productivity and driving profitability, with expected annualized savings beginning in Fiscal 2021[180]. Tax and Liabilities - The company recorded an income tax benefit of $(16,610) on a pre-tax loss of $(55,747) during the 26 weeks ended October 31, 2020, resulting in an effective income tax rate of 29.8%[90]. - The company recorded a liability of $224 for cash-settled phantom share unit awards as of October 31, 2020[88]. - As of October 31, 2020, other long-term liabilities included $25.7 million related to long-term tax payable associated with the LIFO reserve, with $7.6 million becoming currently payable due to inventory level declines[189]. Operational Metrics - The company opened 80 new stores and closed 60 stores during the 26 weeks ended October 31, 2020, ending the period with a total of 1,439 stores[133]. - Barnes & Noble Education operates 1,439 bookstores, including 768 physical and 671 virtual locations, serving over 6 million students[1]. - The company has approximately $26.7 million remaining available under its stock repurchase program, with no shares repurchased under the program during the 26 weeks ended October 31, 2020[190].