Barnes & Noble Education(BNED)2019-08-27 20:40Financial Performance - Total sales decreased by $17.8 million, or 5.3%, to $319.7 million for the 13 weeks ended July 27, 2019, compared to $337.5 million for the same period in 2018[108]. - Product sales and other decreased by 4.9% to $302.2 million for the 13 weeks ended July 27, 2019, from $317.8 million for the same period in 2018[108]. - Rental income decreased by 11.2% to $17.4 million for the 13 weeks ended July 27, 2019, compared to $19.6 million for the same period in 2018[108]. - Retail sales decreased by $12.4 million, or 4.3%, to $274.7 million during the 13 weeks ended July 27, 2019, compared to $287.1 million during the same period in 2018[112]. - Comparable store sales decreased by $9.0 million, or 3.5%, during the 13 weeks ended July 27, 2019, compared to a decrease of $6.4 million, or 2.5%, in the same period in 2018[116]. - Wholesale sales decreased by $17.6 million, or 19.6%, to $72.3 million during the 13 weeks ended July 27, 2019, from $89.9 million during the same period in 2018[117]. - The company reported a net loss of $32.2 million for the 13 weeks ended July 27, 2019, compared to a net loss of $38.6 million for the same period in 2018[104]. - Adjusted EBITDA improved to a loss of $25.1 million for the 13 weeks ended July 27, 2019, compared to a loss of $32.5 million for the same period in 2018[104]. Cost and Expenses - Total cost of sales decreased to $248.0 million for the 13 weeks ended July 27, 2019, from $270.9 million for the same period in 2018[107]. - Selling and administrative expenses increased to $97.7 million for the 13 weeks ended July 27, 2019, compared to $99.1 million for the same period in 2018[107]. - Total employee benefit expense for defined contribution plans was $1.538 million for the 13 weeks ended July 27, 2019, down from $2.085 million in the prior year[78]. - Stock-based compensation expense for the 13 weeks ended July 27, 2019, was $2.321 million, slightly down from $2.341 million in the prior year[82]. - Total selling and administrative expenses decreased by $1.4 million, or 1.5%, to $97.7 million during the 13 weeks ended July 27, 2019, from $99.1 million during the same period in 2018[125]. Impairment and Restructuring - The company recognized a non-cash impairment loss of $433,000 in the Retail segment during the 13 weeks ended July 27, 2019[10]. - Restructuring and other charges totaled $1.466 million, primarily for severance and professional service costs[75]. - The company recognized a non-cash impairment loss of $0.4 million in the Retail segment during the 13 weeks ended July 27, 2019[131]. Tax and Interest - The company recorded an income tax benefit of $(14.189) million on a pre-tax loss of $(46.344) million, resulting in an effective tax rate of 30.6%[83]. - Net interest expense decreased by $1.0 million to $2.5 million due to lower borrowings during the 13 weeks ended July 27, 2019[134]. Cash Flow and Borrowings - Cash, cash equivalents, and restricted cash at the end of the period was $8.98 million, down from $14.00 million at the end of the prior year period[145]. - The company had $174.1 million of borrowings under the Credit Agreement as of July 27, 2019[143]. - Net cash flows used in operating activities were $(40.2) million for the 13 weeks ended July 27, 2019, compared to $(27.4) million in the prior year[145]. - Cash flows provided by financing activities were $40.6 million for the 13 weeks ended July 27, 2019, compared to $33.8 million in 2018, reflecting a net change of $6.8 million due to increased net borrowings[147]. - As of July 27, 2019, the company had net total outstanding borrowings of $174.1 million, down from $230.2 million as of July 28, 2018[148]. Business Operations and Strategy - The Retail Segment operates 1,491 bookstores, including 777 physical and 714 virtual bookstores, serving over 6 million students[88]. - First Day total revenue increased by 46% compared to the prior year, driven by the inclusive access program[88]. - The company plans to grow by introducing scalable digital solutions and expanding market share through acquisitions and partnerships[88]. - The company opened 84 new stores and closed 41 stores, ending the period with a total of 1,491 stores[112]. - The company continues to see downward enrollment trends at colleges and universities, impacting overall business growth[98]. - Online degree program enrollments are expected to grow, despite declining overall higher education enrollment[98]. Risks and Future Outlook - The company believes future cash from operations and access to borrowings will adequately fund operating and financing needs, although future capital requirements depend on various factors including economic conditions and inventory levels[151]. - The company faces various risks including competitive conditions, economic environment, and potential changes in consumer demand that could impact future performance[161]. - The company has no off-balance sheet arrangements as of July 27, 2019[156]. - The company did not repurchase any shares under its stock repurchase program during the 13 weeks ended July 27, 2019, leaving approximately $26.7 million available for future repurchases[153].