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Barnes & Noble Education(BNED) - 2024 Q2 - Quarterly Report

Financial Performance - Cash flows used in operating activities from continuing operations during the 26 weeks ended October 28, 2023 were (47.2)million,adecreaseof(47.2) million, a decrease of 57.3 million compared to cash flows provided by operating activities of 10.1millionduringthesameperiodin2022[135].NetIncomefromContinuingOperationswas10.1 million during the same period in 2022[135]. - Net Income from Continuing Operations was 24.9 million for the 13 weeks ended October 28, 2023, compared to 24.2millionforthesameperiodin2022[166].CashFlowfromOperatingActivitiesfromContinuingOperationswas24.2 million for the same period in 2022[166]. - Cash Flow from Operating Activities from Continuing Operations was (47.2) million for the 26 weeks ended October 28, 2023, compared to 10.1millionforthesameperiodin2022[166].Thecompanyreportedanetlossof10.1 million for the same period in 2022[166]. - The company reported a net loss of (674) for the 13 weeks ended October 28, 2023, compared to a net loss of (2,024)forthesameperiodin2022[202].Thecompanyreportedanetlossof(2,024) for the same period in 2022[202]. - The company reported a net loss of 26,208 thousand for the period ending October 28, 2023, an improvement from a net loss of 30,563thousandinthesameperiodlastyear[220].Forthe13weeksendedOctober28,2023,netincomefromcontinuingoperationswas30,563 thousand in the same period last year[220]. - For the 13 weeks ended October 28, 2023, net income from continuing operations was 24.85 million, compared to 24.17millionforthesameperiodin2022,representingayearoveryearincreaseof2.824.17 million for the same period in 2022, representing a year-over-year increase of 2.8%[299]. - Total sales for the 13 weeks ended October 28, 2023, were 610,379, compared to 608,633forthesameperiodin2022,reflectingaslightincreaseof0.3608,633 for the same period in 2022, reflecting a slight increase of 0.3%[297]. - Total sales for the 13 weeks ended October 28, 2023 were 2,784 thousand, a decrease from 8,465thousandinthesameperiodlastyear[261].DebtandInterestExpensesInterestexpenserecognizedduringthe26weeksendedOctober28,2023was8,465 thousand in the same period last year[261]. Debt and Interest Expenses - Interest expense recognized during the 26 weeks ended October 28, 2023 was 18.9 million, compared to 8.8millionforthesameperiodin2022,indicatingasignificantincrease[143].TheTermLoansaccrueinterestatarateof11.258.8 million for the same period in 2022, indicating a significant increase[143]. - The Term Loans accrue interest at a rate of 11.25%, with all interest during the 13 weeks ended October 28, 2023 incurred in kind[141]. - The company incurred debt issuance costs totaling 11.5 million related to the July 2023 Credit Agreement amendment, which will be amortized over the term of the credit agreement[139]. - The company incurred debt issuance costs totaling 1.4millionrelatedtotheOctober2023CreditAgreementamendment[168].Thecompanyincurreddebtissuancecoststotaling1.4 million related to the October 2023 Credit Agreement amendment[168]. - The company incurred debt issuance costs totaling 0.4 million related to the March 2023 Term Loan Credit Agreement amendment[183]. - The company incurred interest expense of 10,664forthe13weeksendedOctober28,2023,comparedto10,664 for the 13 weeks ended October 28, 2023, compared to 4,886 for the same period in 2022, representing a significant increase of 118.5%[202]. - The company incurred 863forinterestinkindontheTermLoansduringthe26weeksendedOctober28,2023,with863 for interest in kind on the Term Loans during the 26 weeks ended October 28, 2023, with 30,863 of outstanding borrowings as of that date[285]. Sales and Revenue - Retail sales increased by 9.7million,or1.29.7 million, or 1.2%, to 844.8 million during the 26 weeks ended October 28, 2023, compared to 835.1millionduringthesameperiodin2022[161].Totalcoursematerialproductsalesincreasedby835.1 million during the same period in 2022[161]. - Total course material product sales increased by 26.6 million, or 4.9%, to 573.9millionduringthe26weeksendedOctober28,2023,primarilyduetothegrowthofBNCFirstDayprograms[161].Totalgeneralmerchandiseproductnetsalesdecreasedby573.9 million during the 26 weeks ended October 28, 2023, primarily due to the growth of BNC First Day programs[161]. - Total general merchandise product net sales decreased by 17.8 million, or 8.4%, to 193.7millionduringthesameperiod,primarilyduetolowercommissionsforlogogeneralmerchandise[161].TotalBNCFirstDaySalesroseto193.7 million during the same period, primarily due to lower commissions for logo general merchandise[161]. - Total BNC First Day Sales rose to 199.2 million, up from 143.3millionyearoveryear,alsoa39143.3 million year-over-year, also a 39% increase[320]. - First Day Complete Sales increased to 136.4 million on October 28, 2023, from 90.0milliononOctober29,2022,representinga5290.0 million on October 29, 2022, representing a 52% increase[320]. - First Day Sales reached 62.8 million, up 18% from 53.3millioninthepreviousyear[320].OperationalChangesandRestructuringThecompanyraisedadditionalliquidityandtookoperationalrestructuringactionstoimproveliquidityandalleviatesubstantialdoubtaboutitsabilitytocontinueasagoingconcern[166].Thecompanysworkforcereductionandoperationalstreamliningeffortsareexpectedtoenhanceproductivityandprofitabilitymovingforward[257].Thecompanyachievedannualizedsavingsof53.3 million in the previous year[320]. Operational Changes and Restructuring - The company raised additional liquidity and took operational restructuring actions to improve liquidity and alleviate substantial doubt about its ability to continue as a going concern[166]. - The company’s workforce reduction and operational streamlining efforts are expected to enhance productivity and profitability moving forward[257]. - The company achieved annualized savings of 30,000 to 35,000fromcostreductioninitiativesimplementedduringFiscal2023,withfurtherplannedsavingsofapproximately35,000 from cost reduction initiatives implemented during Fiscal 2023, with further planned savings of approximately 25,000 in Fiscal 2024[257]. - During the 13 weeks ended October 28, 2023, restructuring and other charges totaled 4.3million,comparedto4.3 million, compared to 0.3 million for the same period in 2022[179]. Cash and Liquidity - Cash, cash equivalents, and restricted cash at the end of the period were 35,341,including35,341, including 20,333 of restricted cash related to commission due to Lids[215]. - The company expects to maintain adequate liquidity levels to support ongoing inventory purchases and related vendor payments[176]. - The tightening of available credit commitments raised substantial doubt about the company's ability to continue as a going concern, which management addressed by implementing a liquidity improvement plan[215]. - Cash and cash equivalents decreased to 15,008thousandfrom15,008 thousand from 17,296 thousand year-over-year, a decline of approximately 13.2%[219]. - The company reported a total stockholders' equity of 105,964thousand,downfrom105,964 thousand, down from 200,464 thousand year-over-year, a decrease of approximately 47%[219]. Stock Repurchase and Shareholder Actions - During the 13 and 26 weeks ended October 28, 2023, the company repurchased 66,852 and 144,750 shares of Common Stock, respectively, outside of the stock repurchase program[152]. - As of October 28, 2023, the approximate dollar value of shares that may yet be purchased under publicly announced plans or programs is 26,669,324[178]. - The company repurchased 66,852 shares of Common Stock during the 13 weeks ended October 28, 2023, as part of employee tax withholding obligations[276]. Segment Performance - The company has two reportable segments: Retail and Wholesale, following the classification of the DSS Segment as Assets Held for Sale and Discontinued Operations[238]. - The Wholesale Segment serves approximately 2,900 physical bookstores and 554 virtual bookstores, indicating a broad distribution network[274]. - The company operates 1,271 physical, virtual, and custom bookstores, serving more than 5.8 million students[226]. Future Outlook and Strategy - The company plans to continue expanding its market presence through new strategies and partnerships[322]. - The company plans to move many institutions to the First Day Complete model in Fiscal 2024 and the majority by Fiscal 2025[228]. - 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 F/L Relationship with Fanatics and Lids[226].