Barnes & Noble Education(BNED) - 2021 Q2 - Earnings Call Transcript

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]