Barnes & Noble Education(BNED) - 2019 Q3 - Quarterly Report

Business Operations - The company operates 1,453 physical and virtual bookstores, serving over 6 million students[94]. - The company opened 1 new BNC store and 6 MBS Direct stores during the 39 weeks ended January 26, 2019[112]. - The total number of MBS Direct stores at the end of the period was 680, with a net increase of 6 stores compared to the previous year[112]. - The number of BNC stores at the end of the period was 773, with a net change of 0 stores opened or closed during the 13 weeks[112]. Financial Performance - Total sales for the 13 weeks ended January 26, 2019, were $550.33 million, a decrease of 8.8$603.39 million for the same period in 2018[109]. - Total sales for the 39 weeks ended January 26, 2019, decreased by $143.4 million, or 7.8$1,702.6 million from $1,846.0 million in the prior year[122]. - The net income for the 13 weeks ended January 26, 2019, was$769,000, a significant recovery from a net loss of $283.24 million in the same period of 2018[109]. - The company’s net income for the 39 weeks ended January 26, 2019, was$21.8 million, compared to a net loss of $(269.6) million in the prior year[156]. - Adjusted Earnings (non-GAAP) for the 13 weeks ended January 26, 2019, were$3.1 million, down from $19.6 million in the same period of 2018[159]. Sales and Revenue - Product sales and other accounted for 89.8$39.9 million, or 8.0%, to $461.0 million during the 13 weeks ended January 26, 2019, compared to$500.9 million in the same period in 2018[125]. - Textbook revenue for BNC decreased primarily due to lower new and used textbook sales, while digital and eTextbook revenue increased[126]. - MBS total sales decreased by $22.5 million, or 16.2$116.4 million during the 13 weeks ended January 26, 2019 from $138.9 million during the same period last year[128]. Expenses and Costs - Total employee benefit expense for the 39 weeks ended January 26, 2019, was$4,978, compared to $5,289 for the same period in 2018[78]. - Selling and administrative expenses as a percentage of total sales increased to 20.2$325.4 million, representing a significant portion of the total costs[120]. - Total selling and administrative expenses decreased by $1.5 million, or 1.3$110.9 million during the 13 weeks ended January 26, 2019 from $112.4 million in the same period in 2018[138]. Tax and Financial Obligations - The company recorded an income tax benefit of$(294) on a pre-tax income of $475 for the 13 weeks ended January 26, 2019, resulting in an effective tax rate of (61.9)$175.9 million for the 39 weeks ended January 26, 2019, compared to $140.4 million for the same period in 2018, an increase of$35.5 million[167]. - Cash flows used in investing activities decreased to $41.7 million for the 39 weeks ended January 26, 2019, from$88.8 million in the same period in 2018, a reduction of 53%[168]. - Cash flows used in financing activities increased to $128.3 million for the 39 weeks ended January 26, 2019, compared to$48.2 million in the same period in 2018, an increase of $80.1 million[169]. - The company has a committed principal amount of$400 million under its asset-backed revolving credit facility and a $100 million incremental FILO Facility, with a commitment fee of 0.375% on the unused portion[173]. Challenges and Risks - The market for educational materials is experiencing significant changes, with increased competition from alternative media and digital platforms impacting traditional sales channels[102]. - The company faces risks including a decline in college enrollment, competitive conditions, and the performance of digital sales initiatives[182]. - The company is unable to predict future trends for CPI and inventory levels, making it difficult to project the long-term tax payable associated with the LIFO reserve[174].