Barnes & Noble Education(BNED) - 2022 Q3 - Quarterly Report

Financial Performance - The ongoing COVID-19 pandemic has significantly negatively impacted the company's business, resulting in an unprecedented material decline in revenue[35] - Total sales for the 13 weeks ended January 29, 2022, were $402,798, a decrease of 2% from $411,613 in the same period last year[56] - Retail total sales for the 39 weeks ended January 29, 2022, were $1,194,161, up from $1,122,959 in the prior year, reflecting a growth of approximately 6.4%[56] - The company reported a net loss of $36.8 million for the quarter, an improvement from a net loss of $48.3 million in the same quarter last year[126] - For the 39 weeks ended January 29, 2022, the net loss was $(58.6) million, an improvement from $(87.4) million in the prior year, indicating a 33.0% reduction in losses[172] Revenue Recognition - Revenue from the rental of physical textbooks is deferred and recognized over the rental period, typically for a single semester[45] - The company expects to recognize $51,125 of deferred revenue within the next 12 months, indicating anticipated revenue recognition from advanced payments[60] - The company recognized commission revenue for logo and emblematic merchandise sales on a net basis starting April 4, 2021, impacting sales recognition compared to prior periods[137] Inventory and Cost of Sales - The company experienced a merchandise inventory loss of $10,262,000 from the sale of logo and emblematic general merchandise inventory during the 52 weeks ended May 1, 2021[41] - The company reported a merchandise inventory loss of $434,000 in the Retail Segment for the 39 weeks ended January 29, 2022[71] - The company’s cost of sales includes merchandise costs, textbook rental amortization, and warehouse costs related to inventory management[48] Seasonal Trends - The company’s business is highly seasonal, with sales generally highest in the second and third fiscal quarters[38] - The business is highly seasonal, with sales typically peaking in the second and third fiscal quarters[118] Impairment and Losses - For the 13 weeks ended January 29, 2022, the company recognized a non-cash impairment loss of $6,411, compared to an impairment loss of $27,630 for the same period in the prior year[53] - An impairment loss of $6.4 million was recognized for certain store-level long-lived assets during the 13 weeks ended January 29, 2022[82] - The company incurred an impairment loss of $6.4 million during the 13 weeks ended January 29, 2022, compared to $27.6 million in the prior year[176] Operating Expenses - Total selling and administrative expenses for the 13 weeks ended January 29, 2022, rose by $8.8 million, or 9.4%, to $101.5 million, compared to $92.7 million in the same period of 2021[157] - Selling and administrative expenses increased to 25.2% of total sales for the 13 weeks ended January 29, 2022, compared to 22.5% in the same period of 2021[128] Cash Flow and Financing - Cash flows from operating activities for the 39 weeks ended January 29, 2022, were $7.9 million, a decrease of $33.3 million compared to $41.2 million for the same period in 2021[188] - The company had $200.4 million outstanding borrowings under the Credit Agreement as of January 29, 2022[184] - The company has a credit facility with a committed principal amount of $400,000, with an option to request an increase of up to $100,000[87] Taxation - The effective income tax rate for the 39 weeks ended January 29, 2022, was (1.4)%, compared to 28.8% for the same period in 2021[170] - The company recorded an income tax expense of $0.6 million on a pre-tax loss of $(36.2) million for the 13 weeks ended January 29, 2022[170] Strategic Initiatives - 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 partnership with Fanatics[107] - The company indicated plans for market expansion and new product development in the upcoming quarters[128] Risks and Challenges - The ongoing impact of COVID-19 continues to affect enrollment trends and consumer spending patterns, particularly in community colleges[119] - The company faces risks related to public health crises, such as the COVID-19 pandemic, which could impact demand for its products and services[202] - There is a potential decline in college enrollment and decreased funding available for students, which may adversely affect revenues[202] - The company is exposed to risks associated with technological changes and data privacy, which could impact its operations[202]