Business Operations - Barnes & Noble Education operates 1,417 physical and virtual bookstores, serving over 6 million students[20]. - The Retail Segment signed contracts for 98 new physical and virtual bookstores, estimated to generate approximately $103 million in first-year annual sales[24]. - The company operates 148 True Spirit e-commerce websites and has seen significant growth in general merchandise e-commerce sales, which are expected to be further bolstered through the FLC Partnership[32]. - The Wholesale Segment has a large inventory of approximately 280,000 textbook titles and processes over 21 million textbooks annually through a highly automated distribution facility[44]. - The company operates 769 physical campus stores, with 104 contracts expiring in 2022 and 432 contracts expiring in 2027 and later[122]. - The company has transitioned more than 300 stores to a Custom Store Solutions model, allowing direct-to-student fulfillment of course material orders during COVID-19[43]. - The company operates 77 customized cafés and 12 stand-alone convenience stores at physical campus locations, adapting offerings to meet changing market needs[32]. Financial Performance - Total sales for the fiscal year ended May 1, 2021, were $1,433.89 million, a decrease of 22.5% from $1,851.06 million in the previous year[275]. - The company reported a net loss of $131.79 million for the fiscal year ended May 1, 2021, compared to a net loss of $38.25 million in the prior year, representing an increase in loss of 244.5%[275]. - Gross profit for the fiscal year ended May 1, 2021, was $252.66 million, down 42.9% from $442.55 million in the previous year[275]. - Selling and administrative expenses decreased to $338.28 million in the fiscal year ended May 1, 2021, from $404.47 million in the previous year, a reduction of 16.3%[275]. - The company experienced a significant decline in rental income, which fell to $134.15 million from $179.86 million, a decrease of 25.4%[275]. - Total current assets decreased from $584,919 thousand as of May 2, 2020, to $500,833 thousand as of May 1, 2021, representing a decline of approximately 14.4%[280]. - Stockholders' equity decreased from $417,751 thousand as of May 2, 2020, to $301,034 thousand as of May 1, 2021, a decline of approximately 28.0%[280]. Digital Solutions and Innovations - The company experienced a 70% growth in new subscribers for its bartleby suite of products and services during Fiscal 2021, totaling over 300,000 new subscribers[20]. - The Digital Student Solutions segment includes operations of Student Brands, LLC, and bartleby, providing direct-to-student subscription-based services[51]. - Bartleby offers over 2 million textbook solutions and over 3 million question and answer solutions, enhancing the student learning experience[54]. - The company has partnered with major publishers like Cengage Learning, McGraw-Hill Education, and Pearson to provide digital content through the First Day platform[30]. - The company entered into an agreement with Wolfram|Alpha to develop a math solver for the bartleby suite, enhancing its digital offerings[52]. - The company continues to invest in digital content and solutions to complement its bookstore and wholesale businesses, leveraging its physical presence on campuses[51]. Market Trends and Competition - The overall economic environment and college enrollment trends significantly impact the company's business performance[61]. - The company faces competition from various vendors, including Amazon and Chegg.com, in the digital student solutions market[60]. - The company faces significant competition from various college bookstore operators and educational content providers, including Follett Corporation and Amazon, impacting pricing strategies and market share[85]. - Approximately 30% of college and university affiliated bookstores in the U.S. are operated by their respective institutions, indicating a trend towards outsourcing[24]. COVID-19 Impact - The COVID-19 pandemic has materially and adversely impacted the company's business and revenues, particularly in the fourth quarter of 2020[82]. - The company has implemented safety measures in response to COVID-19, including increased sanitization efforts and remote work arrangements for non-retail employees[75]. - The COVID-19 pandemic significantly impacted revenue, with ongoing uncertainty regarding its effects on enrollments and university budgets[294]. - The company has faced risks related to the COVID-19 pandemic, including potential reductions in government funding for education impacting demand for its products and services[82]. Employee and Organizational Structure - As of May 1, 2021, the company had 4,095 domestic employees, including approximately 2,761 full-time employees[69]. - Approximately 63% of full-time and part-time employees identify as women, and about 30% identify as ethnically diverse[74]. - The company completed an organizational restructuring in its Retail Segment, resulting in a significant number of promotions to field leadership roles[70]. - The company is focused on creating an inclusive culture, with training programs on inclusion and diversity topics planned for Fiscal 2022[74]. Regulatory and Compliance Issues - The company is subject to evolving regulations affecting online business operations, including privacy and consumer protection laws[65]. - Compliance with data privacy laws such as GDPR and CCPA may require substantial expenditures and modifications to data processing practices[109]. - The company is subject to various domestic and international laws regarding data protection, which could increase compliance costs and impact business operations[105]. Strategic Initiatives - The company expects to expand its strategic opportunities through acquisitions and partnerships, particularly in digital solutions[289]. - The company may pursue strategic acquisitions and partnerships to grow its business, but faces challenges in identifying suitable candidates and obtaining financing[99]. - The company is focusing on digital initiatives to retain and expand customer relationships, acquire new accounts, and develop higher education digital products[99]. Financial Liabilities and Assets - The company had $177.6 million of borrowings outstanding under the Credit Facility and FILO Facility as of May 1, 2021[251]. - Cash, cash equivalents, and restricted cash at the end of the period increased to $16,814 thousand from $9,008 thousand at the beginning of the period[283]. - Long-term borrowings increased from $99,700 thousand as of May 2, 2020, to $127,600 thousand as of May 1, 2021, an increase of approximately 28.0%[280]. - The company relies on proprietary technology for managing textbook inventory and distribution, which is critical for operational efficiency[113].

Financial Data and Key Metrics Changes - Total sales for Q3 2021 were $411.6 million, down from $502.3 million in the prior year, a decrease of $90.7 million or 18.1% [28] - Retail comparable store sales declined 19.9%, with an 8.1% decline in textbook sales and a 46% decline in general merchandise [30] - Consolidated gross margin rate for the quarter was 17.2%, compared to 23.6% in the prior year [33] - Selling and administrative expenses were reduced by $13.5 million or 12.7% compared to the prior year [35] - Cash balance at the end of the quarter was $9.9 million, with outstanding borrowings of $150.8 million, up from $65.9 million in the prior year [37] Business Line Data and Key Metrics Changes - The Retail segment saw a decrease of $70.3 million in sales, while the Wholesale segment decreased by $27.5 million [28] - DSS sales grew by $0.8 million or 12% to $7.2 million, driven by a 53% increase in bartleby subscriptions [33][18] - First Day offerings grew 107% to $46.4 million during the quarter [30] Market Data and Key Metrics Changes - The Wholesale segment's net sales decreased by 41.1% to $39.5 million, primarily due to lower sales at non-BNC bookstores [32] - The retail experience remained challenged due to many campuses operating in a hybrid or remote format [12] Company Strategy and Development Direction - The company is focusing on enhancing its digital offerings and partnerships, such as the strategic omnichannel merchandising partnership with Fanatics and Lids [14][16] - The First Day Complete program is expected to continue growing, with agreements in place for 31 campus stores representing over 160,000 undergraduate enrollments [9] - The company aims to leverage its partnerships to improve customer experience and expand product selection [15][17] Management's Comments on Operating Environment and Future Outlook - Management expects the pandemic to continue impacting results for the remainder of the fiscal year but remains optimistic about future growth [24] - The company is confident in its ability to achieve EBITDA positivity in fiscal 2022, driven by increased on-campus activities and the growth of bartleby [59][60] - Management highlighted the importance of flexibility in learning models post-pandemic, which will sustain demand for digital solutions [19] Other Important Information - The company signed over $100 million in new retail contracts this fiscal year, indicating strong demand for its services [26] - A new DSS President, David Nenke, has been appointed to lead the digital retail subscription business [23] Q&A Session Summary Question: How will First Day and First Day Complete roll out to students? - All 31 campus stores will participate in First Day Complete starting in fall 2021, with ongoing efforts to secure additional agreements [42] Question: What are universities saying about plans for in-person learning? - There is optimism for more in-person learning in fall 2021, with many universities planning for in-person graduations and orientations [46] Question: How will the general merchandise business change with the Fanatics partnership? - The partnership aims to enhance product assortment and improve the customer experience, leveraging both companies' strengths [50][54] Question: What is the outlook for fiscal 2022? - The company is optimistic about achieving EBITDA positivity, driven by increased on-campus activities and growth in digital offerings [59][60] Question: What is the impact of the new DSS President on the business? - David Nenke is expected to capitalize on existing momentum and enhance the strategic direction of the bartleby product [70][72]

Financial Performance - Total sales for the 13 weeks ended January 30, 2021, were $411,613 thousand, a decrease of 18.1% compared to $502,292 thousand for the same period in 2020[124]. - Net loss for the 13 weeks ended January 30, 2021, was $(48,289) thousand, compared to a net loss of $(1,693) thousand for the same period in 2020[124]. - Adjusted EBITDA for the 13 weeks ended January 30, 2021, was $(20,782) thousand, a significant decline from $13,415 thousand for the same period in 2020[124]. - Gross margin for the 13 weeks ended January 30, 2021, was 17.2%, down from 23.6% in the same period of the previous year[125]. - Total sales decreased by $90.7 million, or 18.1%, to $411.6 million during the 13 weeks ended January 30, 2021, compared to $502.3 million during the same period in 2020[133]. - Total sales decreased by $383.1 million, or 24.0%, to $1,211.1 million during the 39 weeks ended January 30, 2021, compared to $1,594.2 million during the same period in 2020[133]. - The company reported an operating loss of $116.9 million for the 39 weeks ended January 30, 2021[134]. - The company experienced a gross profit of $220,459 thousand for the 39 weeks ended January 30, 2021, compared to $380,115 thousand for the same period in 2020, indicating a decline of about 42%[176]. Impairment and Restructuring - An impairment loss of $27,630 was recognized during the 39 weeks ended January 30, 2021, with a tax impact of $20,506, primarily related to store-level long-lived assets[89]. - Restructuring and other charges totaled $10,727 for the 39 weeks ended January 30, 2021, primarily for severance and professional service costs[90]. - The company recognized a non-cash impairment loss of $27.6 million during the 13 weeks ended January 30, 2021, primarily related to store-level long-lived assets[161]. - The company recognized restructuring and other charges totaling $1.7 million during the 13 weeks ended January 30, 2021, primarily for severance and other employee termination costs[162]. Sales and Market Trends - The company expects general merchandise sales to continue increasing over the long term, driven by evolving consumer trends and enhanced e-commerce capabilities[103]. - The COVID-19 pandemic significantly impacted operations, with many schools adopting remote learning, leading to decreased foot traffic and sales in physical stores[107]. - The company anticipates ongoing enrollment declines in higher education, which could further impact sales and financial performance[116]. - The market for educational materials is undergoing significant changes, with increased competition from alternative sources and digital platforms[116]. - The retail segment's sales for the 39 weeks ended January 30, 2021, were $1,122,959 thousand, down from $1,474,413 thousand in the same period of 2020, a decrease of approximately 24%[176]. Operational Changes - The company implemented a significant cost reduction program aimed at streamlining operations and maximizing productivity, initiated in late Fiscal 2020[179]. - The company continued to adapt its offerings to support students and institutions during the pandemic, including providing free shipping and expanded digital content[179]. - The company opened 88 new stores and closed 66 stores during the 39 weeks ended January 30, 2021, ending with a total of 1,441 stores[137]. Cash Flow and Financing - Cash flows provided by operating activities during the 39 weeks ended January 30, 2021 were $41.6 million, a decrease of $50.4 million compared to $92.0 million during the same period in 2020[184]. - Cash flows used in investing activities were $(26.0) million for the 39 weeks ended January 30, 2021, compared to $(27.3) million in the prior year, primarily due to lower capital expenditures[186]. - Cash flows used in financing activities were $(13.9) million for the 39 weeks ended January 30, 2021, a significant decrease of $55.0 million compared to $(68.9) million in the same period in 2020[187]. - As of January 30, 2021, the company had $150.8 million in outstanding borrowings under its Credit Agreement, highlighting liquidity challenges[178]. Tax and Compensation - The company recorded an income tax benefit of $(35,334) on a pre-tax loss of $(122,760) during the 39 weeks ended January 30, 2021, resulting in an effective tax rate of 28.8%[99]. - The company has a total unrecognized compensation cost related to unvested awards of $12,318 as of January 30, 2021, expected to be recognized over a weighted-average period of 2.4 years[98]. - The total compensation expense for long-term incentive awards was $5,586 for the 39 weeks ended January 30, 2021, compared to $6,000 for the same period in the previous year[98]. Legal and Compliance - The company is involved in various legal proceedings, including antitrust claims related to the sale of course materials, but does not expect these to have a material adverse effect on its financial position[100]. - The company has identified various risks including operational performance, technological changes, and data privacy issues that could impact its business[197]. - The company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level[201]. - No changes in internal control over financial reporting were identified during the third quarter that materially affected the company's reporting[202].

Financial Performance - Total sales for the 13 weeks ended October 31, 2020, were $595,485 thousand, a decrease of 22.9% compared to $772,228 thousand for the same period in 2019[121]. - Net income for the 13 weeks ended October 31, 2020, was $7,515 thousand, down from $35,931 thousand in the prior year, representing a decline of 79.1%[121]. - Adjusted EBITDA for the 13 weeks ended October 31, 2020, was $24,535 thousand, a decrease of 67.1% from $74,544 thousand in the same period of 2019[121]. - Total sales decreased by $176.7 million, or 22.9%, to $595.5 million during the 13 weeks ended October 31, 2020, compared to $772.2 million during the same period in 2019[128]. - Total sales decreased by $292.4 million, or 26.8%, to $799.5 million during the 26 weeks ended October 31, 2020, compared to $1,091.9 million during the same period in 2019[130]. - The company experienced a significant decline in adjusted earnings, reporting $(30,641) thousand for the 26 weeks ended October 31, 2020, compared to $7,759 thousand in the same period of 2019[121]. - The company reported a net income loss of $39,137,000 for the 26 weeks ended October 31, 2020, compared to a net income of $3,776,000 for the same period in 2019[171]. - The adjusted earnings (non-GAAP) for the 13 weeks ended October 31, 2020, were $11,075,000, a decrease from $37,834,000 in the prior year, representing a decline of approximately 70.7%[171]. Sales and Revenue Breakdown - Retail sales decreased by $165.2 million, or 22.3%, to $576.5 million during the 13 weeks ended October 31, 2020, compared to $741.8 million during the same period in 2019[133]. - Retail sales decreased by $281.1 million, or 27.7%, to $735.3 million during the 26 weeks ended October 31, 2020, compared to $1,016.4 million during the same period in 2019[133]. - Total sales for the Retail segment were $576,514,000, with a gross profit of $95,704,000, resulting in a gross margin of approximately 16.6%[176]. - Rental income for the 13 weeks ended October 31, 2020, was $43,653 thousand, compared to $53,685 thousand in the same period of 2019, reflecting a decrease of 18.7%[125]. - Wholesale sales decreased by $3.8 million, or 9.5%, to $36.4 million during the 13 weeks ended October 31, 2020, compared to $40.2 million in the same period in 2019[138]. - DSS total sales increased by $0.7 million, or 14.0%, to $5.9 million during the 13 weeks ended October 31, 2020, from $5.2 million in the prior year[139]. Cost and Expenses - Gross margin for the 13 weeks ended October 31, 2020, was 19.4%, down from 24.2% in the prior year, indicating a decline of 4.8 percentage points[122]. - Selling and administrative expenses as a percentage of total sales increased to 15.4% for the 13 weeks ended October 31, 2020, compared to 14.7% in the same period of 2019[122]. - Total Selling and Administrative Expenses decreased by $21.4 million, or 18.9%, to $92.0 million for the 13 weeks ended October 31, 2020, compared to $113.4 million for the same period in 2019[151]. - Retail segment selling and administrative expenses decreased by $21.2 million, or 21.5%, to $77.4 million for the 13 weeks ended October 31, 2020, primarily due to a $17.5 million decrease in stores payroll and operating expenses[152]. - Total cost of sales for the 13 weeks ended October 31, 2020, was $480,200 thousand, an increase from $585,278 thousand in the same period of 2019[125]. - Cost of sales as a percentage of sales increased to 80.6% during the 13 weeks ended October 31, 2020, compared to 75.8% during the same period in 2019[140]. Debt and Financing - The company borrowed $330,800 and repaid $406,000 under the Credit Agreement during the 26 weeks ended October 31, 2020, with $99,500 of outstanding borrowings as of that date[81]. - The company issued $4,759 in letters of credit under the Credit Facility as of October 31, 2020[81]. - As of October 31, 2020, the company had $99.5 million in outstanding borrowings under the credit facility, having borrowed $330.8 million and repaid $406.0 million during the 26 weeks[188]. - The company operates under a credit agreement with a total committed principal amount of $400 million, with an option to request an increase of up to $100 million[188]. Impact of COVID-19 - The company experienced significant impacts from COVID-19, leading to the closure of most physical campus stores and a shift to online services[2]. - Fiscal 2021 second quarter results were adversely affected by ongoing pandemic-related adjustments in learning models, with fewer students returning to campus[3]. - Enrollment trends are negatively impacted by COVID-19, with a significant reduction in U.S. economic activity and increased unemployment potentially leading to decreased enrollment[7]. - The ongoing COVID-19 pandemic significantly impacted the company's operations, with fewer students returning to campus and overall enrollment declines affecting sales[180]. - The company has temporarily suspended employer matching contributions into its 401(k) plans through the end of December 2020 due to COVID-19 related impacts[85]. Strategic Initiatives - The company is focused on expanding e-commerce capabilities and strategic partnerships to enhance value for shareholders[8]. - The company anticipates continued growth in general merchandise sales as product assortments evolve with consumer trends[6]. - The company expects new bookstore contracts to drive future growth, while also anticipating potential closures of less profitable locations[10]. - The company made continued progress in the development of its next generation e-commerce platform, which launched in Fiscal 2021[136]. - The company implemented a significant cost reduction program aimed at maximizing productivity and driving profitability, with expected annualized savings beginning in Fiscal 2021[180]. Tax and Liabilities - The company recorded an income tax benefit of $(16,610) on a pre-tax loss of $(55,747) during the 26 weeks ended October 31, 2020, resulting in an effective income tax rate of 29.8%[90]. - The company recorded a liability of $224 for cash-settled phantom share unit awards as of October 31, 2020[88]. - As of October 31, 2020, other long-term liabilities included $25.7 million related to long-term tax payable associated with the LIFO reserve, with $7.6 million becoming currently payable due to inventory level declines[189]. Operational Metrics - The company opened 80 new stores and closed 60 stores during the 26 weeks ended October 31, 2020, ending the period with a total of 1,439 stores[133]. - Barnes & Noble Education operates 1,439 bookstores, including 768 physical and 671 virtual locations, serving over 6 million students[1]. - The company has approximately $26.7 million remaining available under its stock repurchase program, with no shares repurchased under the program during the 26 weeks ended October 31, 2020[190].

Financial Data and Key Metrics Changes - Total sales for Q2 2021 were $595.5 million, a decrease of $176.7 million or 22.9% compared to $772.2 million in the prior year [24] - Retail comparable store sales declined 28.1%, with textbook sales down 19% and general merchandise sales down 52% [25][26] - Consolidated gross margin rate decreased to 19.4% from 24.2% in the prior year, primarily due to a shift to lower margin digital courseware and reduced sales of higher margin general merchandise [27] Business Line Data and Key Metrics Changes - The retail segment saw a decrease of $165.2 million in sales, while the wholesale segment decreased by $3.8 million [24] - The DSS segment experienced a growth of $0.7 million or 14% to $5.9 million, driven by Bartleby subscriptions which increased by 53% to $1.7 million [27] - First Day offerings grew 77% to $53.4 million during the quarter, indicating strong demand for inclusive access models [26] Market Data and Key Metrics Changes - eCommerce sales represented 66% of total Q2 sales, up from 36% in the prior year, highlighting a significant shift towards online purchasing [12] - The demand for Bartleby’s homework help solutions surged, with unique visitors increasing by 378% year-over-year [15] Company Strategy and Development Direction - The company has made strategic investments in digital offerings, e-commerce solutions, and warehouse operations to adapt to the changing educational landscape due to COVID-19 [7][8] - The focus on First Day and First Day Complete programs aims to enhance affordability and access for students, which is increasingly relevant in the current environment [13][14] - Partnerships with companies like Blackboard are being pursued to expand the reach of Bartleby solutions [18][20] Management's Comments on Operating Environment and Future Outlook - Management expects COVID-19 to continue impacting the business throughout fiscal 2021, leading to ongoing adjustments in cost structure and operations [22][29] - The company remains committed to managing expenses prudently and maintaining liquidity in light of the challenging sales environment [30] - There is optimism regarding the potential for increased on-campus activity in the spring semester, although uncertainty remains [36][38] Other Important Information - The cash balance at the end of the quarter was $7.4 million, with outstanding borrowings of $99.5 million, reflecting a shift from the prior year when there were no borrowings [30] - Capital expenditures for the quarter were $9.1 million, down from $10.9 million in the prior year [31] Q&A Session Summary Question: How are universities approaching inventory building for the spring semester? - Management indicated that it is difficult to predict due to varying responses to COVID-19, with some schools opting for remote learning [34][36] Question: What are the expectations for the rollout of the new e-commerce platform? - The phased rollout is planned to start after the spring rush, with customization for each school being a key factor [42][44] Question: How is the pipeline looking for new business heading into 2021? - There is a robust pipeline with significant discussions ongoing regarding transitioning to First Day Complete models [47][82]

Financial Performance - Total sales for the 13 weeks ended August 1, 2020, were $204,014,000, a decrease of 36.2% compared to $319,657,000 for the same period in 2019 [111]. - The net loss for the 13 weeks ended August 1, 2020, was $46,652,000, compared to a net loss of $32,155,000 for the same period in 2019 [111]. - Adjusted EBITDA for the 13 weeks ended August 1, 2020, was $(38,017,000), compared to $(25,123,000) for the same period in 2019 [111]. - Total sales decreased by $115.6 million, or 36.2%, to $204.0 million during the 13 weeks ended August 1, 2020, from $319.7 million during the same period in 2019 [118]. - Retail sales decreased by $115.9 million, or 42.2%, to $158.8 million during the 13 weeks ended August 1, 2020, compared to $274.7 million in the prior year [122]. - Wholesale sales increased by $8.0 million, or 11.0%, to $80.3 million during the 13 weeks ended August 1, 2020, from $72.3 million in the same period in 2019 [126]. - Rental income decreased by $6.6 million, or 38.0%, to $10.8 million during the 13 weeks ended August 1, 2020, from $17.4 million in the prior year [124]. - The operating loss increased to $(58.9) million, or (28.9)% of sales, during the 13 weeks ended August 1, 2020, compared to $(43.8) million (13.8%) in the same period of 2019 [142]. - The company recorded a net loss of $(46.7) million during the 13 weeks ended August 1, 2020, compared to a net loss of $(32.2) million in the same period of 2019 [146]. - Adjusted Earnings (non-GAAP) was $(41.7) million during the 13 weeks ended August 1, 2020, compared to $(30.1) million in the prior year [148]. Operational Changes - The company recognized restructuring and other charges totaling $5.67 million during the 13 weeks ended August 1, 2020, including $3.4 million for severance costs [79]. - The company has temporarily suspended employer matching contributions into its 401(k) plans through the end of December 2020 due to COVID-19 impacts [82]. - The company implemented a significant cost reduction program aimed at maximizing productivity and driving profitability, with expected annualized savings beginning in Fiscal 2021 [155]. - Total selling and administrative expenses decreased by $27.7 million, or 28.3%, to $70.0 million during the 13 weeks ended August 1, 2020, from $97.7 million in the same period of 2019 [134]. - Retail selling and administrative expenses decreased by $26.8 million, or 32.0%, to $57.0 million, mainly due to a $22.8 million reduction in payroll and operating expenses [135]. - Total depreciation and amortization expense decreased by $1.8 million, or 11.4%, to $14.1 million during the 13 weeks ended August 1, 2020, from $15.9 million in the prior year [139]. Market and Competitive Environment - The COVID-19 pandemic significantly impacted the company's first quarter results, with many schools shifting to remote learning [92]. - The company continues to face downward enrollment trends and shrinking resources from state and federal government for colleges and universities [103]. - The market for educational materials is undergoing significant changes due to rising tuition costs and increased competition from alternative sources [102]. - The company is experiencing growing competition from alternative media and sources of textbooks, impacting its traditional distribution channels [103]. - The company operates in a competitive environment with risks including COVID-19 impacts, changes in college enrollment, and digital sales growth not meeting investment rates [168]. Financial Position and Cash Flow - Cash flows used in operating activities were $(54.8) million, an increase of $14.6 million compared to $(40.2) million in the prior year, primarily due to higher net loss and changes in working capital [157]. - Cash flows provided by financing activities were $59.5 million for the 13 weeks ended August 1, 2020, compared to $40.6 million in the prior year, reflecting higher net borrowings [160]. - Capital expenditures totaled $7.1 million for the 13 weeks ended August 1, 2020, down from $8.3 million in the same period in 2019 [159]. - The company had $234.6 million in outstanding borrowings under the Credit Agreement as of August 1, 2020, compared to $174.1 million as of July 27, 2019 [161]. - As of August 1, 2020, cash, cash equivalents, and restricted cash at the end of the period were $8.2 million, down from $9.0 million at the beginning of the period [156]. Strategic Initiatives - The company expanded its strategic partnership with VitalSource® in August 2020 to provide students with access to additional learning opportunities [91]. - The company plans to continue expanding its general merchandise e-commerce capabilities and increase market share through new accounts and strategic partnerships [91]. - The Board of Directors authorized a stock repurchase program of up to $50 million, with approximately $26.7 million remaining available as of August 1, 2020 [163]. - During the 13 weeks ended August 1, 2020, the company repurchased 178,669 shares of Common Stock outside of the stock repurchase program for employee tax withholding obligations [163]. Risk Management - The company faces risks related to data privacy, information security, and potential disruptions from third-party service providers [168]. - The company anticipates that strategic objectives and synergies from acquisitions may not be fully realized or may take longer than expected [168]. - The company has not identified any changes in internal control over financial reporting that materially affected its controls during the first quarter [175]. - The effectiveness of the company's disclosure controls and procedures was evaluated and deemed effective at a reasonable assurance level [174]. - The company has no material changes in market risk disclosures compared to the previous fiscal year [172].

Financial Data and Key Metrics Changes - Total sales for Q1 2021 were $204 million, a decrease of 36% from $319.7 million in the prior year, primarily due to COVID-19 related campus closures [44][42] - The consolidated gross margin rate for the quarter was 15.1%, down from 22.4% in the prior year, attributed to a shift to lower margin digital courseware and reduced sales of higher margin general merchandise [49][42] - Cash balance at the end of the quarter was $7.5 million compared to $8.2 million in the prior year, with outstanding borrowings increasing to $234.6 million from $174.1 million [51][42] Business Line Data and Key Metrics Changes - Retail segment experienced a 42.8% decline in comparable sales, while comparable course material sales declined by 10.1% [45][42] - BNC's First Day offering grew 156% to $9.1 million during the quarter, indicating strong demand for digital course materials [46][42] - DSS sales increased by $0.5 million or 9.3% to $5.9 million, driven by growth in bartleby subscriptions, which doubled to $1.4 million [46][42] Market Data and Key Metrics Changes - The company signed an estimated $70 million in new business during the quarter, indicating a strong pipeline despite the challenges posed by COVID-19 [23][42] - eCommerce sales represented 73% of total Q1 sales, up from 31% a year ago, reflecting a significant shift towards online shopping [36][42] Company Strategy and Development Direction - The company concluded its strategic review, determining that the continued execution of its current business plan is the best path forward [7][6] - Investments in digital offerings, eCommerce solutions, and warehouse operations have become crucial in adapting to the ongoing challenges posed by the pandemic [15][8] - The company is focused on preserving liquidity while balancing capital allocation and executing its strategic plan for long-term sustainable value creation [11][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges faced by schools due to COVID-19, including lower enrollments and the impact of remote learning [13][14] - The company remains confident in its strategy and believes it has sufficient liquidity to manage through the ongoing impact of COVID-19 [10][11] - Management expects continued strong demand for digital learning resources and support tools as students adapt to virtual or hybrid learning environments [28][27] Other Important Information - The company has entered into a cooperation agreement with its largest shareholder, Outerbridge Capital, which includes board nominations and standstill provisions [12] - The majority of on-campus stores have reopened with safety measures in place, including contactless payment options [34][42] Q&A Session Summary Question: Can you talk about your confidence moving into the fall and expectations for foot traffic? - Management highlighted a focus on liquidity, with borrowings reduced to approximately $55 million, and emphasized disciplined inventory management [57][59] Question: What are you seeing in terms of usage of bartleby compared to earlier this spring? - Management noted a significant increase in traffic and usage of bartleby, with a 50% increase in traffic between March and April [65][66] Question: Can you discuss the sales cycle for First Day Complete and potential for scaling? - Management indicated that while some schools deferred decisions, there is renewed interest, and they expect significant growth in the number of schools adopting First Day Complete [78][81] Question: How are you staying relevant with students who are not on campus? - Management emphasized increased collaboration with schools to communicate offerings and the importance of the new eCommerce system to enhance the student shopping experience [86][90] Question: Can you provide insights on the competitive landscape and market share? - Management expressed confidence in taking market share, particularly due to the unique capabilities of MBS in fulfilling orders during the pandemic [101][104]

Barnes & Noble Education, Inc. (NYSE:BNED) Q4 2020 Earnings Conference Call July 14, 2020 10:00 AM ET Company Participants Andy Milevoj - Investor Relations Mike Huseby - Chairman and Chief Executive Officer Tom Donohue - Chief Financial Officer Jonathan Shar - Executive Vice President, BNED Retail and Client Solutions Lisa Malat - President, Barnes & Noble College Kanuj Malhotra - President, Digital Student Solutions David Henderson - President, MBS Conference Call Participants Ryan MacDonald - Needham Ale ...

COVID-19 Impact - The COVID-19 pandemic has had a material adverse effect on the company's business and revenues, particularly starting in mid-March 2020, with ongoing impacts expected[79]. - The company has faced challenges in customer engagement due to potential school closures and reduced in-person attendance[80]. - The company continues to adapt to COVID-19 impacts by providing free shipping and expanded digital content offerings to students during campus closures[317]. - The company experienced significant impacts from COVID-19, including campus store closures, which affected operations and comparability of results across periods[323]. - The company has implemented cost reduction efforts, including workforce reductions, in response to the financial impact of the pandemic[80]. Competition and Market Dynamics - The company faces significant competition from various educational content providers and online platforms, impacting pricing and market share[83]. - The retail price for textbooks is influenced by contracts with colleges, which have been reduced due to a focus on affordability, negatively impacting revenue and margins[85]. - The business is highly dependent on college enrollment and consumer spending patterns, with potential adverse effects from economic downturns[90]. - Seasonal fluctuations impact textbook sales, with peak sales in the second and third fiscal quarters[94]. Financial Performance - Total sales for the 53 weeks ended May 2, 2020, were $1,851,063, a decrease of 9.0% compared to $2,034,643 for the 52 weeks ended April 27, 2019[300]. - Gross profit for the same period was $442,549, representing a gross margin of 23.9%, down from $527,726 and a margin of 25.9% in the previous year[300]. - The net loss for the 53 weeks ended May 2, 2020, was $38,250, compared to a net loss of $24,374 for the prior year, reflecting an increase in losses of 56.8%[300]. - The company’s accumulated deficit increased to $(282,827) as of May 2, 2020, from $(244,577) the previous year, indicating a worsening financial position[305]. - The company reported a basic loss per share of $0.80 for the 53 weeks ended May 2, 2020, compared to a loss of $0.52 per share in the previous year[300]. Strategic Initiatives - The company aims to grow its digital products and services, which is critical for future operating results[89]. - The company has entered into partnerships and acquisitions to expand its Digital Student Solutions offerings, including a partnership with The Princeton Review[83]. - The company plans to expand its general merchandise e-commerce capabilities and increase market share through new accounts and strategic acquisitions[315]. - The company is exploring various strategic alternatives to enhance shareholder value, including potential partnerships and joint ventures[119]. Supplier and Inventory Risks - Approximately 31% of merchandise purchased during Fiscal 2020 came from the company's four largest retail suppliers, with the largest supplier accounting for about 12%[86]. - The company’s wholesale business sources over 90% of its inventory from two primary channels, making it vulnerable to supplier disruptions[86]. - The four largest suppliers accounted for approximately 32.2% of merchandise purchased during the 53 weeks ended May 2, 2020, indicating a concentration in supplier relationships[331]. Debt and Cash Management - As of May 2, 2020, the company's cash and cash equivalents totaled approximately $8.2 million, with $174.7 million of borrowings outstanding under Credit Facility and FILO Facility[283]. - Proceeds from borrowings under the Credit Agreement amounted to $600,900,000, an increase from $521,200,000 in the prior year, highlighting the company's reliance on debt financing[308]. - Outstanding borrowings under the Credit Facility and FILO Facility as of May 2, 2020, were $99,700 thousand and $75,000 thousand, respectively, with total outstanding borrowings of $174,700 thousand[404]. Regulatory and Compliance Risks - The company is subject to various laws and regulations that may impact its marketing and sales efforts, including the CAN-SPAM Act and GDPR, which could require substantial expenditures for compliance[100]. - Changes in federal and state minimum wage laws could increase selling costs and necessitate a reevaluation of the wage structure for employees[101]. - The company faces risks related to international operations, including compliance with various regulations and currency fluctuations[95]. Technology and Data Security - Data security risks are significant, with potential breaches leading to legal and financial exposure[97]. - Cyber-attacks are increasing in frequency and sophistication, posing threats to the company's information technology systems[98]. - The company has invested significantly in proprietary technology for managing textbook inventory and distribution, and any failure in these systems could disrupt operations and adversely impact results[106]. Asset Management and Impairment - The company recorded a pre-tax goodwill impairment loss of $49.3 million in Fiscal 2019 and $313.1 million in Fiscal 2018, indicating significant challenges in maintaining asset value[111]. - The company recognized a non-cash impairment loss of $433 thousand in the Retail segment during the 53 weeks ended May 2, 2020, and a total of $57,748 thousand in the previous year[408]. - The company completed its annual goodwill impairment test in the third quarter of Fiscal 2020, concluding that the fair value of the DSS reporting unit exceeded its carrying value, resulting in no impairment recognized[343]. Employee and Benefit Expenses - Total employee benefit expense for defined contribution plans was $5,015 for the 53 weeks ended May 2, 2020, down from $6,702 in the previous fiscal year, reflecting a decrease of approximately 25.2%[424]. - The company temporarily suspended employer matching contributions into its 401(k) plans due to COVID-19 impacts, effective April 2020 through December 2020[425]. Acquisitions - The acquisition of PaperRater was completed for cash consideration of $10,000, enhancing the digital content library with additional writing services[375]. - The acquisition of Student Brands was completed for $61,997, focusing on study tools and writing assistance for students[376].

Financial Performance - Total sales for the 39 weeks ended January 25, 2020, were $1,594.2 million, a decrease from $1,700.3 million for the same period in 2019, representing a decline of approximately 6.2%[162] - Total sales for the 13 weeks ended January 25, 2020, were $502.3 million, a decrease of 8.3% from $548.0 million for the same period in 2019[113] - Net loss for the 13 weeks ended January 25, 2020, was $1.7 million compared to a net income of $769,000 for the same period in 2019[113] - Adjusted EBITDA for the 39 weeks ended January 25, 2020, was $62.8 million, down from $85.3 million for the same period in 2019, reflecting a decrease of approximately 26.3%[162] - Adjusted EBITDA for the 13 weeks ended January 25, 2020, was $13.4 million, compared to $22.2 million for the same period in 2019, a decrease of 39.5%[158] - The company reported a gross profit of $380.1 million for the 39 weeks ended January 25, 2020, down from $410.7 million in the same period of 2019, a decrease of approximately 7.4%[162] - Gross profit for the 13 weeks ended January 25, 2020, was $118.5 million, compared to $132.9 million for the same period in 2019[120] Cost and Expenses - Total employee benefit expense for defined contribution plans was $3,683 during the 39 weeks ended January 25, 2020, compared to $4,978 for the same period in 2019, reflecting a decrease of 26%[82] - Stock-based compensation expense for the 39 weeks ended January 25, 2020, was $6,000, down from $6,851 in the prior year, indicating a reduction of approximately 12.4%[90] - Selling and administrative expenses for the 39 weeks ended January 25, 2020, were $317.3 million, compared to $325.4 million for the same period in 2019, a decrease of approximately 2.1%[162] - Selling and administrative expenses for the 13 weeks ended January 25, 2020, were $106.2 million, compared to $110.9 million for the same period in 2019[120] - Depreciation and amortization expense decreased by $1.3 million, or 7.7%, to $15.1 million during the 13 weeks ended January 25, 2020[144] Revenue Segmentation - The Retail Segment's product sales accounted for 90.3% of total sales in the 13 weeks ended January 25, 2020, compared to 89.8% in the same period of 2019[114] - Retail sales decreased by $40.1 million, or 8.1%, to $458.0 million during the 13 weeks ended January 25, 2020, compared to $498.1 million during the same period in 2019[124] - Retail sales decreased by $94.7 million, or 6.0%, to $1,474.4 million during the 39 weeks ended January 25, 2020, compared to $1,569.1 million during the same period in 2019[124] - Wholesale sales decreased by $11.5 million, or 14.7%, to $67.0 million during the 13 weeks ended January 25, 2020, compared to $78.5 million during the same period in 2019[129] - DSS total sales increased by $1.2 million, or 22.9%, to $6.4 million during the 13 weeks ended January 25, 2020, compared to $5.2 million during the same period in 2019[130] Impairment and Restructuring - An impairment loss of $433 was recognized in the Retail segment during the 39 weeks ended January 25, 2020, related to non-recoverable capitalized development costs[79] - The company experienced a non-cash impairment loss of $433,000 during the 39 weeks ended January 25, 2020[119] - Restructuring and other charges totaled $3,240 during the 39 weeks ended January 25, 2020, primarily for professional service costs and employee termination benefits[80] - The company reported a restructuring charge of $205,000 for the 13 weeks ended January 25, 2020[120] - Restructuring and other charges totaled $0.2 million and $3.2 million for the 13 and 39 weeks ended January 25, 2020, respectively[145] Borrowings and Cash Flow - The company borrowed $383,400 and repaid $451,000 under the Credit Agreement during the 39 weeks ended January 25, 2020, with outstanding borrowings of $65,900 as of that date[78] - Cash flows provided by operating activities during the 39 weeks ended January 25, 2020, were $86.4 million, down from $175.9 million in the prior year, a decrease of $89.5 million[168] - The company experienced a net cash flow used in investing activities of $(21.7) million for the 39 weeks ended January 25, 2020, compared to $(41.7) million in the prior year, a decrease of approximately 48.0%[169] Strategic Initiatives - The company has retained Morgan Stanley & Co. as a financial advisor to explore strategic opportunities, including potential partnerships and acquisitions[98] - A significant cost reduction program was implemented in February 2020, with expected annualized cost savings primarily realized beginning in Fiscal 2021, and a restructuring charge anticipated between $10 million to $15 million[95] - The company implemented a cost reduction program in February 2020 to streamline operations and drive profitability[146] Market Conditions and Risks - The overall economic environment and college enrollment trends are critical factors affecting the company's business performance, with a noted decline in community college enrollments[105] - The company anticipates potential risks including a decline in college enrollment and competitive conditions that may impact future performance[184] - The company is unable to predict future trends for the consumer price index and inventory levels, making it difficult to project tax liabilities[175] Stock and Shareholder Information - The stock repurchase program authorized by the Board of Directors allows for up to $50 million in repurchases, with approximately $26.7 million remaining available as of January 25, 2020[176] - During the 39 weeks ended January 25, 2020, the company repurchased 374,733 shares outside of the stock repurchase program for employee tax withholding obligations[177] - The company has not repurchased any shares under the stock repurchase program during the 39 weeks ended January 25, 2020[176]