Barnes & Noble Education(BNED) - 2022 Q2 - Quarterly Report

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$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$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]