Barnes & Noble Education(BNED) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total sales for Q1 2023 were $263.9 million, a 9.6% increase from$ 240.8 million in the prior year [22] - Retail sales increased by $26 million or 12.4%, benefiting from a strong graduation season and higher demand for general merchandise [22][23] - The retail non-GAAP adjusted EBITDA loss was$ 25 million, compared to a loss of $19.6 million in the prior year [17] Business Line Data and Key Metrics Changes - Retail segment sales increased by$ 26 million, while wholesale segment revenue declined by 16.6% to $37.1 million due to supply constraints and lower demand for physical textbooks [22][26] - DSS segment sales grew by$ 0.9 million or 10.6% to $9.2 million, driven by an increase in subscription sales [26] Market Data and Key Metrics Changes - The First Day sales grew by 67% to$ 45 million, with First Day Complete sales doubling to $16.9 million [24] - The number of campus stores utilizing the First Day Complete program increased to 111, representing an 85% growth in undergraduate enrollment compared to Fall 2021 [14] Company Strategy and Development Direction - The company is focusing on expanding its First Day Complete program, which has shown to improve student outcomes and increase enrollment [13][19] - There is a strong pipeline of institutions evaluating the FDC program, indicating potential for continued growth [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increased on-campus traffic and fewer restrictions, which may positively impact enrollment and sales [32] - The company is preparing for a robust Fall Rush, expecting strong demand for general merchandise and course materials [52] Other Important Information - The consolidated gross margin rate for the quarter was 24.1%, down from 24.9% in the prior year, primarily due to lower sales in the wholesale segment [27] - Cash balance at the end of the quarter was$ 9.1 million, with outstanding borrowings of $260.3 million [29] Q&A Session Summary Question: What is the enrollment outlook for this Fall? - Management is optimistic about increased traffic and fewer restrictions on campuses, but specific enrollment data will be available after the ad drop period [32][34] Question: What trends are observed in the First Day Complete program? - There is improved knowledge and acceptance of the program, with expectations of positive gains in participation rates [40] Question: How is consumer spending behavior changing? - While inflation is impacting costs, management expects a strong Fall Rush and is prepared for increased demand [52][54]