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Barnes & Noble Education(BNED) - 2021 Q3 - Earnings Call Transcript
BNEDBarnes & Noble Education(BNED)2021-03-09 19:43
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Financial Data and Key Metrics Changes - Total sales for Q3 2021 were 411.6million,downfrom411.6 million, down from 502.3 million in the prior year, a decrease of 90.7millionor18.190.7 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 9.9million,withoutstandingborrowingsof9.9 million, with outstanding borrowings of 150.8 million, up from 65.9millionintheprioryear[37]BusinessLineDataandKeyMetricsChanges−TheRetailsegmentsawadecreaseof65.9 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 27.5million[28]−DSSsalesgrewby27.5 million [28] - DSS sales grew by 0.8 million or 12% to 7.2million,drivenbya537.2 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 39.5million,primarilyduetolowersalesatnon−BNCbookstores[32]−Theretailexperienceremainedchallengedduetomanycampusesoperatinginahybridorremoteformat[12]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonenhancingitsdigitalofferingsandpartnerships,suchasthestrategicomnichannelmerchandisingpartnershipwithFanaticsandLids[14][16]−TheFirstDayCompleteprogramisexpectedtocontinuegrowing,withagreementsinplacefor31campusstoresrepresentingover160,000undergraduateenrollments[9]−Thecompanyaimstoleverageitspartnershipstoimprovecustomerexperienceandexpandproductselection[15][17]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpectsthepandemictocontinueimpactingresultsfortheremainderofthefiscalyearbutremainsoptimisticaboutfuturegrowth[24]−ThecompanyisconfidentinitsabilitytoachieveEBITDApositivityinfiscal2022,drivenbyincreasedon−campusactivitiesandthegrowthofbartleby[59][60]−Managementhighlightedtheimportanceofflexibilityinlearningmodelspost−pandemic,whichwillsustaindemandfordigitalsolutions[19]OtherImportantInformation−Thecompanysignedover39.5 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]