Barnes & Noble Education(BNED)2020-03-03 20:33Financial Data and Key Metrics Changes - Total sales for Q3 2020 were $502.3 million, a decrease of $45.7 million or 8.3% compared to $548 million in the prior year [34] - Consolidated gross margin for the quarter was 23.6%, down from 24.3% in the prior year [38] - Selling and administrative expenses decreased by $4.8 million or 4.3% compared to the prior year [39] - Cash balance at the end of the quarter was $9.8 million, a decrease of $12.2 million from $22 million in the prior year [40] - Expected adjusted EBITDA for fiscal 2020 is between $80 million and $85 million [46] Business Line Data and Key Metrics Changes - Retail segment sales decreased by $40.1 million, with comparable store sales down 7.3% for the quarter [34][35] - Wholesale segment net sales were $67 million, a decrease of $11.5 million or 14.7% compared to the prior year [37] - Digital Student Solutions (DSS) sales increased to $6.4 million, up $1.2 million or 22.9% due to increased Bartleby subscriptions [38] Market Data and Key Metrics Changes - Year-to-date, contracts to open new stores are expected to generate over $110 million in gross sales, with approximately $50 million net after store closings [16] - Comparable course material sales decreased by 9.3%, impacted by lower average selling prices [36] Company Strategy and Development Direction - The company is focusing on growing its high-margin DSS business and expanding course material adoptions through new digital models [8] - A significant cost reduction program is being implemented to streamline operations and enhance profitability [27][43] - The launch of the new e-commerce platform is expected to drive substantial value and increase revenue for the general merchandise business [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to stabilize and achieve meaningful cash flow growth beginning in fiscal year 2022 [31] - The company is adapting to the evolving higher education industry and is focused on delivering innovative solutions to both institutions and students [7][28] Other Important Information - The company is implementing a restructuring charge of $10 million to $15 million during Q4 fiscal 2020, with expected annualized savings of $8 million to $12 million [45] - The First Day Complete program is gaining traction, with expectations of 4 to 5 times growth in participating institutions in fiscal 2021 [20][66] Q&A Session Summary Question: Can you talk about the cost reduction program and specific areas for optimization? - Management indicated that cost reductions have been ongoing for 12 to 18 months, with a more focused program now being implemented [48][49] Question: What are the usage trends for Bartleby during busy academic periods? - Usage rates for Bartleby have peaked, with high engagement metrics indicating students find value in the service [53] Question: Have there been any changes in foot traffic due to concerns around coronavirus? - Management noted that it was too early to see significant impacts from coronavirus on business, but they are monitoring the situation closely [60][62] Question: What is the uptake of the First Day Complete offering? - The First Day Complete program has shown significant demand, with expectations for substantial growth in the number of institutions adopting it [66][68]