Barnes & Noble Education(BNED) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total sales for Q2 2022 were $627 million, an increase of$31.5 million or 5.3% compared to $595.5 million in the prior year [21] - The retail segment saw a$32.4 million increase, while the wholesale segment decreased by $14.7 million [21] - The consolidated gross margin rate improved to 23.2$15.9 million or 17.3% due to store reopenings and increased staffing [27] - Cash balance at the end of the quarter was $11 million, with outstanding borrowings of$183.3 million, up from $99.5 million in the prior year [28] Business Line Data and Key Metrics Changes - Retail gross comparable store sales increased by 13.2$96 million [22] - General merchandise sales grew by 78.3%, recovering from a 52% decline in the previous year [22] - DSS revenue grew 39% to $8.3 million, with Bartleby revenue increasing approximately 70% year-over-year [18] Market Data and Key Metrics Changes - Undergraduate enrollment declined by approximately 3% according to the National Student Clearinghouse Research Center [8] - The company experienced challenges with fewer international students and ongoing virtual class offerings at community colleges [8] Company Strategy and Development Direction - The company is focused on executing strategic initiatives that enhance competitive offerings and customer value propositions [10] - The First Day Complete program is gaining traction, with significant growth in student enrollment and positive impacts on academic outcomes [11][14] - The partnership with Fanatics and Lids is expected to enhance merchandise offerings and improve the omni-channel customer experience [15][17] Management's Comments on Operating Environment and Future Outlook - The operating environment remains challenging due to enrollment declines, labor shortages, and supply chain issues, but the company is optimistic about future improvements [9] - Management expressed confidence in the momentum of the First Day offerings and their potential to drive growth [10] - The company anticipates that the current challenges will begin to mitigate as they move into the next fiscal year [9] Other Important Information - The company operates 1,445 college, university, and K-12 school bookstores, including 794 physical bookstores and 651 virtual bookstores [28] - The Bartleby suite of solutions is designed to improve student success and outcomes, with a focus on enhancing product features and customer engagement [56] Q&A Session Summary Question: Performance of First Day Complete offering - Management is pleased with the operational execution of First Day Complete, noting that digital courseware facilitated fulfillment [31] - Financial impact is influenced by enrollments and pricing, with overall performance meeting expectations despite some challenges [32][33] Question: Sales pipeline for First Day Complete - The addition of 10 new stores for the spring semester indicates a strong sales pipeline, with optimism about future enrollments [39] Question: Impact of Fanatics and Lids partnership on merchandise sales - E-commerce sales have significantly improved with the rollout of the Fanatics platform, and management is optimistic about holiday sales performance [42] Question: Bartleby usage and adoption trends - Bartleby has seen good usage and increased metrics for paid subscribers, indicating strong customer engagement [44] Question: Future growth initiatives for Bartleby - The focus will be on enhancing product features and expanding the reach of Bartleby Plus to improve customer engagement [56]