Barnes & Noble Education(BNED)2021-09-01 16:00Financial 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].