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].

Financial Data and Key Metrics Changes - Total sales for Q2 2021 were $595.5 million, a decrease of $176.7 million or 22.9% compared to $772.2 million in the prior year [24] - Retail comparable store sales declined 28.1%, with textbook sales down 19% and general merchandise sales down 52% [25][26] - Consolidated gross margin rate decreased to 19.4% from 24.2% in the prior year, primarily due to a shift to lower margin digital courseware and reduced sales of higher margin general merchandise [27] Business Line Data and Key Metrics Changes - The retail segment saw a decrease of $165.2 million in sales, while the wholesale segment decreased by $3.8 million [24] - The DSS segment experienced a growth of $0.7 million or 14% to $5.9 million, driven by Bartleby subscriptions which increased by 53% to $1.7 million [27] - First Day offerings grew 77% to $53.4 million during the quarter, indicating strong demand for inclusive access models [26] Market Data and Key Metrics Changes - eCommerce sales represented 66% of total Q2 sales, up from 36% in the prior year, highlighting a significant shift towards online purchasing [12] - The demand for Bartleby’s homework help solutions surged, with unique visitors increasing by 378% year-over-year [15] Company Strategy and Development Direction - The company has made strategic investments in digital offerings, e-commerce solutions, and warehouse operations to adapt to the changing educational landscape due to COVID-19 [7][8] - The focus on First Day and First Day Complete programs aims to enhance affordability and access for students, which is increasingly relevant in the current environment [13][14] - Partnerships with companies like Blackboard are being pursued to expand the reach of Bartleby solutions [18][20] Management's Comments on Operating Environment and Future Outlook - Management expects COVID-19 to continue impacting the business throughout fiscal 2021, leading to ongoing adjustments in cost structure and operations [22][29] - The company remains committed to managing expenses prudently and maintaining liquidity in light of the challenging sales environment [30] - There is optimism regarding the potential for increased on-campus activity in the spring semester, although uncertainty remains [36][38] Other Important Information - The cash balance at the end of the quarter was $7.4 million, with outstanding borrowings of $99.5 million, reflecting a shift from the prior year when there were no borrowings [30] - Capital expenditures for the quarter were $9.1 million, down from $10.9 million in the prior year [31] Q&A Session Summary Question: How are universities approaching inventory building for the spring semester? - Management indicated that it is difficult to predict due to varying responses to COVID-19, with some schools opting for remote learning [34][36] Question: What are the expectations for the rollout of the new e-commerce platform? - The phased rollout is planned to start after the spring rush, with customization for each school being a key factor [42][44] Question: How is the pipeline looking for new business heading into 2021? - There is a robust pipeline with significant discussions ongoing regarding transitioning to First Day Complete models [47][82]

Financial Performance - Total sales for the 13 weeks ended August 1, 2020, were $204,014,000, a decrease of 36.2% compared to $319,657,000 for the same period in 2019 [111]. - The net loss for the 13 weeks ended August 1, 2020, was $46,652,000, compared to a net loss of $32,155,000 for the same period in 2019 [111]. - Adjusted EBITDA for the 13 weeks ended August 1, 2020, was $(38,017,000), compared to $(25,123,000) for the same period in 2019 [111]. - Total sales decreased by $115.6 million, or 36.2%, to $204.0 million during the 13 weeks ended August 1, 2020, from $319.7 million during the same period in 2019 [118]. - Retail sales decreased by $115.9 million, or 42.2%, to $158.8 million during the 13 weeks ended August 1, 2020, compared to $274.7 million in the prior year [122]. - Wholesale sales increased by $8.0 million, or 11.0%, to $80.3 million during the 13 weeks ended August 1, 2020, from $72.3 million in the same period in 2019 [126]. - Rental income decreased by $6.6 million, or 38.0%, to $10.8 million during the 13 weeks ended August 1, 2020, from $17.4 million in the prior year [124]. - The operating loss increased to $(58.9) million, or (28.9)% of sales, during the 13 weeks ended August 1, 2020, compared to $(43.8) million (13.8%) in the same period of 2019 [142]. - The company recorded a net loss of $(46.7) million during the 13 weeks ended August 1, 2020, compared to a net loss of $(32.2) million in the same period of 2019 [146]. - Adjusted Earnings (non-GAAP) was $(41.7) million during the 13 weeks ended August 1, 2020, compared to $(30.1) million in the prior year [148]. Operational Changes - The company recognized restructuring and other charges totaling $5.67 million during the 13 weeks ended August 1, 2020, including $3.4 million for severance costs [79]. - The company has temporarily suspended employer matching contributions into its 401(k) plans through the end of December 2020 due to COVID-19 impacts [82]. - The company implemented a significant cost reduction program aimed at maximizing productivity and driving profitability, with expected annualized savings beginning in Fiscal 2021 [155]. - Total selling and administrative expenses decreased by $27.7 million, or 28.3%, to $70.0 million during the 13 weeks ended August 1, 2020, from $97.7 million in the same period of 2019 [134]. - Retail selling and administrative expenses decreased by $26.8 million, or 32.0%, to $57.0 million, mainly due to a $22.8 million reduction in payroll and operating expenses [135]. - Total depreciation and amortization expense decreased by $1.8 million, or 11.4%, to $14.1 million during the 13 weeks ended August 1, 2020, from $15.9 million in the prior year [139]. Market and Competitive Environment - The COVID-19 pandemic significantly impacted the company's first quarter results, with many schools shifting to remote learning [92]. - The company continues to face downward enrollment trends and shrinking resources from state and federal government for colleges and universities [103]. - The market for educational materials is undergoing significant changes due to rising tuition costs and increased competition from alternative sources [102]. - The company is experiencing growing competition from alternative media and sources of textbooks, impacting its traditional distribution channels [103]. - The company operates in a competitive environment with risks including COVID-19 impacts, changes in college enrollment, and digital sales growth not meeting investment rates [168]. Financial Position and Cash Flow - Cash flows used in operating activities were $(54.8) million, an increase of $14.6 million compared to $(40.2) million in the prior year, primarily due to higher net loss and changes in working capital [157]. - Cash flows provided by financing activities were $59.5 million for the 13 weeks ended August 1, 2020, compared to $40.6 million in the prior year, reflecting higher net borrowings [160]. - Capital expenditures totaled $7.1 million for the 13 weeks ended August 1, 2020, down from $8.3 million in the same period in 2019 [159]. - The company had $234.6 million in outstanding borrowings under the Credit Agreement as of August 1, 2020, compared to $174.1 million as of July 27, 2019 [161]. - As of August 1, 2020, cash, cash equivalents, and restricted cash at the end of the period were $8.2 million, down from $9.0 million at the beginning of the period [156]. Strategic Initiatives - The company expanded its strategic partnership with VitalSource® in August 2020 to provide students with access to additional learning opportunities [91]. - The company plans to continue expanding its general merchandise e-commerce capabilities and increase market share through new accounts and strategic partnerships [91]. - The Board of Directors authorized a stock repurchase program of up to $50 million, with approximately $26.7 million remaining available as of August 1, 2020 [163]. - During the 13 weeks ended August 1, 2020, the company repurchased 178,669 shares of Common Stock outside of the stock repurchase program for employee tax withholding obligations [163]. Risk Management - The company faces risks related to data privacy, information security, and potential disruptions from third-party service providers [168]. - The company anticipates that strategic objectives and synergies from acquisitions may not be fully realized or may take longer than expected [168]. - The company has not identified any changes in internal control over financial reporting that materially affected its controls during the first quarter [175]. - The effectiveness of the company's disclosure controls and procedures was evaluated and deemed effective at a reasonable assurance level [174]. - The company has no material changes in market risk disclosures compared to the previous fiscal year [172].

Financial Data and Key Metrics Changes - Total sales for Q1 2021 were $204 million, a decrease of 36% from $319.7 million in the prior year, primarily due to COVID-19 related campus closures [44][42] - The consolidated gross margin rate for the quarter was 15.1%, down from 22.4% in the prior year, attributed to a shift to lower margin digital courseware and reduced sales of higher margin general merchandise [49][42] - Cash balance at the end of the quarter was $7.5 million compared to $8.2 million in the prior year, with outstanding borrowings increasing to $234.6 million from $174.1 million [51][42] Business Line Data and Key Metrics Changes - Retail segment experienced a 42.8% decline in comparable sales, while comparable course material sales declined by 10.1% [45][42] - BNC's First Day offering grew 156% to $9.1 million during the quarter, indicating strong demand for digital course materials [46][42] - DSS sales increased by $0.5 million or 9.3% to $5.9 million, driven by growth in bartleby subscriptions, which doubled to $1.4 million [46][42] Market Data and Key Metrics Changes - The company signed an estimated $70 million in new business during the quarter, indicating a strong pipeline despite the challenges posed by COVID-19 [23][42] - eCommerce sales represented 73% of total Q1 sales, up from 31% a year ago, reflecting a significant shift towards online shopping [36][42] Company Strategy and Development Direction - The company concluded its strategic review, determining that the continued execution of its current business plan is the best path forward [7][6] - Investments in digital offerings, eCommerce solutions, and warehouse operations have become crucial in adapting to the ongoing challenges posed by the pandemic [15][8] - The company is focused on preserving liquidity while balancing capital allocation and executing its strategic plan for long-term sustainable value creation [11][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges faced by schools due to COVID-19, including lower enrollments and the impact of remote learning [13][14] - The company remains confident in its strategy and believes it has sufficient liquidity to manage through the ongoing impact of COVID-19 [10][11] - Management expects continued strong demand for digital learning resources and support tools as students adapt to virtual or hybrid learning environments [28][27] Other Important Information - The company has entered into a cooperation agreement with its largest shareholder, Outerbridge Capital, which includes board nominations and standstill provisions [12] - The majority of on-campus stores have reopened with safety measures in place, including contactless payment options [34][42] Q&A Session Summary Question: Can you talk about your confidence moving into the fall and expectations for foot traffic? - Management highlighted a focus on liquidity, with borrowings reduced to approximately $55 million, and emphasized disciplined inventory management [57][59] Question: What are you seeing in terms of usage of bartleby compared to earlier this spring? - Management noted a significant increase in traffic and usage of bartleby, with a 50% increase in traffic between March and April [65][66] Question: Can you discuss the sales cycle for First Day Complete and potential for scaling? - Management indicated that while some schools deferred decisions, there is renewed interest, and they expect significant growth in the number of schools adopting First Day Complete [78][81] Question: How are you staying relevant with students who are not on campus? - Management emphasized increased collaboration with schools to communicate offerings and the importance of the new eCommerce system to enhance the student shopping experience [86][90] Question: Can you provide insights on the competitive landscape and market share? - Management expressed confidence in taking market share, particularly due to the unique capabilities of MBS in fulfilling orders during the pandemic [101][104]

Barnes & Noble Education, Inc. (NYSE:BNED) Q4 2020 Earnings Conference Call July 14, 2020 10:00 AM ET Company Participants Andy Milevoj - Investor Relations Mike Huseby - Chairman and Chief Executive Officer Tom Donohue - Chief Financial Officer Jonathan Shar - Executive Vice President, BNED Retail and Client Solutions Lisa Malat - President, Barnes & Noble College Kanuj Malhotra - President, Digital Student Solutions David Henderson - President, MBS Conference Call Participants Ryan MacDonald - Needham Ale ...