Barnes & Noble Education(BNED) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total sales for Q4 2022 were $260.8 million, up from$222.8 million in the prior year, driven by a 32.6% increase in gross comparable store sales [33] - For the full fiscal year, total sales increased by $97.5 million, benefiting from the growth of inclusive access models and more students returning to campus [36] - Consolidated non-GAAP adjusted EBITDA improved by$60.8 million to a loss of $4.8 million for the full year [39] Business Line Data and Key Metrics Changes - Retail segment sales increased significantly, with textbook sales growing over 150$35.1 million in Q4, and general merchandise sales increasing by 76% [34][18] - Inclusive access offerings contributed to a 2.3% increase in comparable course material sales, marking the first increase in over five years [12] - The wholesale business saw a revenue decline of 32%, with EBITDA dropping to $3.8 million [22] Market Data and Key Metrics Changes - Undergraduate enrollment declined by 4.7$106 million [15] Company Strategy and Development Direction - The company is focused on expanding inclusive access offerings, growing general merchandise through partnerships, and increasing digital solutions subscriber base [10][28] - The First Day Complete program aims to reverse long-term declines in course material sales by ensuring students have access to all required materials on the first day of class [13] - The company plans to continue investing in its digital solutions and enhancing store-level economics [20][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the return to traditional on-campus learning but acknowledged ongoing challenges from COVID-19 variants and declining enrollments [7][8] - The company expects significant improvement in retail business driven by new First Day Complete implementations and increased on-campus traffic [39] - Management anticipates challenges in the wholesale business due to inventory constraints and inflationary pressures [40] Other Important Information - The company restated fiscal year 2021 results by $8 million due to out-of-period adjustments, which did not impact non-GAAP EBITDA figures [31] - The First Day Complete program's revenue is expected to continue growing, with commitments from 112 campus stores for the upcoming fall semester [49] Q&A Session Summary Question: Potential for converting First Day Courseware to First Day Complete - Management indicated that they expect to see a trend of campuses converting to First Day Complete, with commitments for 112 stores representing approximately 547,000 undergraduate students [57] Question: Trends in credit hours and pricing - Management noted that pricing varies by institution and is aligned with expectations, with annual reviews to ensure the right pricing for students [60][64] Question: Factors affecting return to pre-pandemic adjusted EBITDA levels - Management highlighted the significant decline in wholesale EBITDA as a major factor, with expectations for retail growth to drive overall improvement [66][76] Question: Guidance on enrollment and wholesale EBITDA - Management confirmed that the decline in wholesale EBITDA is a key driver of the shortfall relative to pre-COVID levels, with expectations for DSS to remain stable while retail is expected to grow [75][80] Question: Prioritization of new bookstore contracts versus existing initiatives - Management emphasized a careful allocation of capital, focusing on First Day Complete and digital business growth while being cautious about opening new stores [84][86]