Amends and Extends Maturity Date of its Credit
Facility to Enhance Financial and Operating Flexibility
Fiscal Year 2023 Consolidated Revenue Increased
3.2% to $1,543 Million
Fiscal Year 2023 Retail Gross Comparable Store
Sales Increased 3.2%
Fiscal Year 2023 General Merchandise Gross
Comparable Store Sales Increased 8.6%
First Day® Complete Revenue Increased 88% to
$198 Million in Fiscal Year 2023
157 Campus Stores Have Committed to Utilize
BNC’s First Day Complete for the Fall 2023; Total Enrollment of
Nearly 800,000*
Barnes & Noble Education, Inc. (NYSE: BNED), a
leading solutions provider for the education industry, today
reported sales and earnings for the fourth quarter and fiscal year
2023, which ended on April 29, 2023.
During the fourth quarter of fiscal year 2023, the assets
related to the Company’s Digital Student Solutions ("DSS") segment
met the criteria for classification as Assets Held for Sale and
Discontinued Operations. Results reported in this press release
reflect results from Continuing Operations. On May 31, 2023, BNED
completed the sale of its DSS segment for cash proceeds of $20
million, net of certain transaction fees, severance costs, escrow,
and other considerations. During the first quarter of fiscal year
2024, the Company expects to record a Gain on Sale of Business in
the range of $2.5 million to $4.5 million.
Fourth Quarter 2023 financial and operational
highlights:
- Consolidated fourth quarter GAAP revenue of $241.8 million
decreased by $9.3 million, or 3.7%, as compared to the prior year
period.
- Consolidated fourth quarter GAAP gross profit of $58.3 million
decreased by $13.9 million, or 19.2%, as compared to the prior year
period.
- Consolidated fourth quarter selling and administrative expenses
decreased by $3.4 million, or 4.3%, as compared to the prior year
period.
- Consolidated fourth quarter GAAP net loss from continuing
operations was $(41.9) million, as compared to a net loss of $(9.3)
million in the prior year period. The increase in net loss from
continuing operations was primarily due to lower gross profit of
$13.9 million, and increases in restructuring and other charges of
$7.5 million, interest expense of $4.7 million and income tax
expense of $10.0 million, primarily due to a $9.6 million income
tax benefit recorded in the fourth quarter of fiscal year
2022.
- Consolidated fourth quarter non-GAAP Adjusted EBITDA from
Continuing Operations was $(18.2) million, as compared to $(7.7)
million in the prior year period.
- Fourth quarter Total Retail gross comparable store sales
increased by $2.1 million, or 0.9%, comprised of a 1.0% increase in
course material sales, and a 0.9% increase in general merchandise
sales. For comparable store sales reporting purposes, logo general
merchandise sales fulfilled by Lids and Fanatics are included on a
gross basis.
- BNC’s First Day® Complete revenue grew 60% to $24.4 million.
116 campus stores utilized BNC’s First Day® Complete courseware
delivery program during the 2023 Spring Term, at institutions
representing approximately 580,000* in total enrollment; up from 76
campus stores and approximately 380,000* in total enrollment in the
2022 Spring Term.
Fiscal Year 2023 financial and operational
highlights:
- Consolidated fiscal year 2023 GAAP revenue of $1,543.2 million
increased by $47.5 million, or 3.2%, as compared to the prior year
period.
- Consolidated fiscal year 2023 GAAP gross profit of $349.4
million increased by $6.6 million, or 1.9%, as compared to the
prior year period.
- Consolidated fiscal year 2023 selling and administrative
expenses increased by $3.6 million, or 1.0%, as compared to the
prior year period.
- Consolidated fiscal year 2023 GAAP net loss from continuing
operations was $(90.1) million, as compared to a net loss of
$(61.6) million in the prior year period. The increase in net loss
from continuing operations was primarily due to increases in
restructuring and other charges of $9.2 million, interest expense
of $12.6 million and income tax expense of $10.2 million, primarily
due to a $9.2 million income tax benefit recorded in fiscal year
2022. These increases in expense were partially offset by higher
gross profit of $6.6 million.
- Consolidated fiscal year 2023 non-GAAP Adjusted EBITDA from
Continuing Operations was $(8.2) million, as compared to $(10.3)
million in the prior year period.
- Total Retail segment gross comparable store sales increased by
$48.0 million, or 3.2%, comprised of a 0.4% increase in course
material sales, and an 8.6% increase in general merchandise sales.
For comparable store sales reporting purposes, logo general
merchandise sales fulfilled by Lids and Fanatics are included on a
gross basis.
- Fiscal year 2023 First Day® Complete revenue grew by $93
million, or 88%, to $198 million, as compared to $105 million in
the prior year period.
- 157 campus stores are committed to utilize First Day® Complete
in the Fall of 2023 representing enrollment of nearly 800,000
undergraduate and post graduate students*, an increase of
approximately 46% compared to Fall of 2022.
- Achieved approximately $17 million of run-rate cost savings in
fiscal year 2023. The Company expects to achieve a total of $30
million to $35 million in annualized run-rate cost savings in
fiscal year 2024 based on actions implemented in fiscal 2023.
Additionally, the Company has identified opportunities to further
reduce expenses and gross capital expenditures in fiscal year
2024.
- Ended the year with 1,366 physical and virtual stores, a net
decrease of 61 stores, as compared to the prior year period, as the
Company focuses on closing unprofitable stores.
*As reported by National Center for Education Statistics
(NCES)
“Fiscal 2023 proved to be a challenging year for BNED, as we
continued to experience macro and market headwinds, particularly in
our a la carte course material business. During the year we took
significant and decisive actions to accelerate our strategy to
unlock the value of BNED. We significantly reduced, and continue to
reduce, our cost structure and streamlined our organization while
taking steps to accelerate the adoption of our more predictable and
profitable First Day® Complete equitable access model. We also
divested our DSS segment to simplify our business and sharpen our
focus on the large opportunities in our retail business,” said
Michael P. Huseby, Chief Executive Officer, BNED. “We believe we
are entering fiscal 2024 with a strong foundation and a substantial
opportunity to further impact the higher education landscape. Our
First Day® Complete equitable access model is gaining momentum. We
are on track to achieve the previously announced $30 million to $35
million of cost reduction initiatives and we are executing on
additional cost reduction opportunities that will impact Fiscal
2024. As a result, we expect to achieve sustainable, profitable
growth in fiscal 2024 and beyond. Additionally, the amendment and
extension of our credit facility and term loan earlier this week
enhances our liquidity position and provides us with greater
operational flexibility to execute on our key strategic initiatives
to achieve BNED’s full potential.”
Fourth Quarter 2023 and Year to Date Results
During the fourth quarter of fiscal year 2023, assets related to
the Company’s DSS Segment met the criteria for classification as
Assets Held for Sale and Discontinued Operations and is no longer a
reportable segment. The Company has two reportable segments: Retail
and Wholesale. Additionally, unallocated shared-service costs,
which include various corporate level expenses and other governance
functions, continue to be presented as “Corporate Services.” All
material intercompany accounts and transactions have been
eliminated in consolidation.
Retail Segment Results
Fourth quarter Retail sales of $235.4 million decreased by $10.2
million or 4.1%, as compared to the prior year period due to
decreases in a la carte course material and supply product
sales.
Total Retail Gross Comparable Store Sales increased by $2.1
million, or 0.9%, for the quarter. Course Material Comparable Store
Sales increased by $0.9 million, or 1.0%, due to increased revenue
from the Company’s BNC First Day models, offset by declines in the
Company’s a la carte course material business. Gross Comparable
Store Sales for general merchandise increased by $1.2 million, or
0.9%, due to increased revenue from logo and emblematic products,
offset by a decline in supply products, particularly computing and
other electronic devices.
Fiscal year 2023 Retail sales of $1,491.7 increased by $52.1
million, or 3.6%, as compared to the prior year period due to
increases in the Company’s BNC First Day models and general
merchandise sales.
Total Retail Gross Comparable Store Sales increased by $48.0
million, or 3.2%, for the fiscal year. Fiscal year 2023 Course
Material Comparable Store Sales increased by $4.1 million, or 0.4%,
due to increased revenue from the Company’s BNC First Day models,
offset by declines in the Company’s a la carte course material
business. Gross Comparable Store Sales for general merchandise
increased by $43.9 million, or 8.6%, due to growth in logo products
and café and convenience offset by declines in supply products and
dorm furnishings.
Fourth quarter Retail non-GAAP Adjusted EBITDA was $(10.0)
million, as compared to $4.2 million in the prior year period.
Retail Non-GAAP Adjusted EBITDA declined due to lower fourth
quarter revenue and lower fourth quarter gross profits, which
included a shift in the mix of buying patterns from physical
textbooks to lower-margin digital course materials within the
Company’s a la carte course material model. Fourth quarter Retail
selling and administrative expenses decreased by $3.8 million, or
5.2%, as compared to the prior year period due to the Company’s
initiatives to drive efficiencies, simplify organizational
structure, and reduce non-essential costs, and lower incentive
compensation expense.
Fiscal year 2023 Retail non-GAAP Adjusted EBITDA increased by
$2.0 million to $10.6 million, primarily due to increased
sales.
Wholesale Segment Results (Before
Intercompany Eliminations)
Wholesale fourth quarter sales of $9.2 million increased by $0.2
million, as compared to the prior year period. The fourth quarter
is the lowest sales period for the Wholesale Segment as they
primarily receive inventory returns and buybacks in preparation for
the upcoming Fall term.
Fiscal year 2023 Wholesale sales of $106.4 million decreased by
$5.9 million, or 5.2%, over the prior year period. The decrease is
primarily due to lower gross sales impacted by supply constraints
resulting from the lack of textbook purchasing opportunities and a
decrease in customer demand resulting from a shift in buying
patterns from physical textbooks to digital products. In the third
and fourth quarter of fiscal year 2023, an easing of supply
constraints relative to the prior year periods resulted in more
textbook purchasing opportunities, which enabled the Company to
fill increasing demand at its Retail Segment bookstores.
Wholesale non-GAAP Adjusted EBITDA for the quarter of $(4.2)
million increased $3.8 million, as compared to $(8.0) million in
the prior year.
Wholesale non-GAAP Adjusted EBITDA for fiscal year 2023 was $3.2
million, as compared to $3.8 million in the prior year period. The
decrease was primarily due to lower sales and margin offset by a
decrease in sales and administrative costs.
Balance Sheet and Cash Flow
As of April 29, 2023, the Company’s cash and cash equivalents
was $14.2 million and total outstanding debt was $184.2 million, as
compared to cash and cash equivalents of $8.8 million and total
outstanding debt of $225.7 million in the prior year period.
On July 28, 2023, the Company announced that it has entered into
an agreement with its financial stakeholders and strategic partners
on the terms of a refinancing that would immediately strengthen the
Company’s liquidity and overall financial positions by extending
the maturity of its debt facilities, amending certain credit
facility covenants and modifying certain other agreements. With
this agreement, the Company is well-positioned to continue
supporting academic institutions and customers nationwide through
the upcoming Fall Rush and the 2023 and 2024 academic years.
Fiscal Year 2024 Outlook
For fiscal year 2024, the Company expects consolidated non-GAAP
Adjusted EBITDA from Continuing Operations to be approximately $40
million. The year-over-year increase in non-GAAP Adjusted EBITDA
from Continuing Operations will be driven by growth in the
Company’s Retail Segment and the impact of cost reductions executed
in fiscal year 2023, and other cost reductions executed in, or
planned for execution in, fiscal year 2024.
Conference Call
A conference call with Barnes & Noble Education, Inc. senior
management will be webcast at 8:30 a.m. Eastern Time on Friday,
August 4, 2023 and can be accessed at the Barnes & Noble
Education corporate website at investor.bned.com or
www.bned.com.
Barnes & Noble Education, Inc. expects to report fiscal year
2024 first quarter earnings in early September.
ABOUT BARNES & NOBLE EDUCATION, INC.
Barnes & Noble Education, Inc. (NYSE: BNED) is a leading
solutions provider for the education industry, driving
affordability, access and achievement at hundreds of academic
institutions nationwide and ensuring millions of students are
equipped for success in the classroom and beyond. Through its
family of brands, BNED offers campus retail services and academic
solutions, wholesale capabilities and more. BNED is a company
serving all who work to elevate their lives through education,
supporting students, faculty and institutions as they make tomorrow
a better, more inclusive and smarter world. For more information,
visit www.bned.com
Forward-Looking Statements
This press release contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and information relating to us and our business that are
based on the beliefs of our management as well as assumptions made
by and information currently available to our management. When used
in this communication, the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,”
“projections,” and similar expressions, as they relate to us or our
management, identify forward-looking statements. Moreover, we
operate in a very competitive and rapidly changing environment. New
risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of
all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements
we may make. In light of these risks, uncertainties and
assumptions, the future events and trends discussed in this press
release may not occur and actual results could differ materially
and adversely from those anticipated or implied in the
forward-looking statements. Such statements reflect our current
views with respect to future events, the outcome of which is
subject to certain risks, including, among others: the amount of
our indebtedness and ability to comply with covenants applicable to
current and /or any future debt financing; our ability to satisfy
future capital and liquidity requirements; our ability to access
the credit and capital markets at the times and in the amounts
needed and on acceptable terms; our ability to maintain adequate
liquidity levels to support ongoing inventory purchases and related
vendor payments in a timely manner; our ability to attract and
retain employees; the pace of equitable access adoption in the
marketplace is slower than anticipated and our ability to
successfully convert the majority of our institutions to our BNC
First Day® equitable and inclusive access course material models or
successfully compete with third parties that provide similar
equitable and inclusive access solutions; the strategic objectives,
successful integration, anticipated synergies, and/or other
expected potential benefits of various strategic and restructuring
initiatives, may not be fully realized or may take longer than
expected; dependency on strategic partnerships, such as with
VitalSource Technologies, Inc. and the Fanatics Retail Group
Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc.
D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L
Partnership”), and the potential for adverse operational and
financial changes to these partnerships, may adversely impact our
business; non-renewal of managed bookstore, physical and/or online
store contracts and higher-than-anticipated store closings;
decisions by colleges and universities to outsource their physical
and/or online bookstore operations or change the operation of their
bookstores; general competitive conditions, including actions our
competitors and content providers may take to grow their
businesses; the risk of changes in price or in formats of course
materials by publishers, which could negatively impact revenues and
margin; changes to purchase or rental terms, payment terms, return
policies, the discount or margin on products or other terms with
our suppliers; product shortages, including decreases in the used
textbook inventory supply associated with the implementation of
publishers’ digital offerings and direct to student textbook
consignment rental programs; work stoppages or increases in labor
costs; possible increases in shipping rates or interruptions in
shipping services; a decline in college enrollment or decreased
funding available for students; decreased consumer demand for our
products, low growth or declining sales; the general economic
environment and consumer spending patterns; trends and challenges
to our business and in the locations in which we have stores; risks
associated with operation or performance of MBS Textbook Exchange,
LLC’s point-of-sales systems that are sold to college bookstore
customers; technological changes; risks associated with counterfeit
and piracy of digital and print materials; risks associated with
data privacy, information security and intellectual property;
disruptions to our information technology systems, infrastructure,
data, supplier systems, and customer ordering and payment systems
due to computer malware, viruses, hacking and phishing attacks,
resulting in harm to our business and results of operations;
disruption of or interference with third party web service
providers and our own proprietary technology; risks associated with
the impact that public health crises, epidemics, and pandemics,
such as the COVID-19 pandemic, have on the overall demand for BNED
products and services, our operations, the operations of our
suppliers and other business partners, and the effectiveness of our
response to these risks; lingering impacts that public health
crises may have on the ability of our suppliers to manufacture or
source products, particularly from outside of the United States;
changes in domestic and international laws or regulations,
including U.S. tax reform, changes in tax rates, laws and
regulations, as well as related guidance; enactment of laws or
changes in enforcement practices which may restrict or prohibit our
use of texts, emails, interest based online advertising, or similar
marketing and sales activities; adverse results from litigation,
governmental investigations, tax-related proceedings, or audits;
changes in accounting standards; and the other risks and
uncertainties detailed in the section titled “Risk Factors” in Part
I - Item 1A in our Form 10-K for the year-ended April 29, 2023.
Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described as anticipated,
believed, estimated, expected, intended or planned. Subsequent
written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements in this paragraph. We
undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise after the date of this press
release.
EXPLANATORY NOTE
During the fourth quarter of fiscal 2023, assets related to our
Digital Student Solutions ("DSS") Segment met the criteria for
classification as Assets Held for Sale and Discontinued Operations
and is no longer a reportable segment. Certain assets and
liabilities associated with the DSS Segment are presented in our
consolidated balance sheets as "Assets Held for Sale" and
"Liabilities Held for Sale". The results of operations related to
the DSS Segment are included in the consolidated statements of
operations as "Loss from discontinued operations, net of tax." The
cash flows of the DSS Segment are also presented separately in our
consolidated statements of cash flows.
On May 31, 2023, subsequent to the end of fiscal 2023, we
completed the sale of these assets related to our DSS Segment for
cash proceeds of $20 million, net of certain transaction fees,
severance costs, escrow, and other considerations. During the first
quarter of fiscal 2024, we expect to record a Gain on Sale of
Business in the range of $2.5 million to $4.5 million. Net cash
proceeds from the sale was used for debt repayment and provided
additional funds for working capital needs under our Credit
Facility.
We have two reportable segments: Retail and Wholesale as
follows:
- The Retail Segment operates 1,366 college, university, and K-12
school bookstores, comprised of 774 physical bookstores and 592
virtual bookstores. Our bookstores typically operate under
agreements with the college, university, or K-12 schools to be the
official bookstore and the exclusive seller of course materials and
supplies, including physical and digital products. The majority of
the physical campus bookstores have school-branded e-commerce
websites which we operate independently or along with our merchant
partners, and which offer students access to affordable course
materials and affinity products, including emblematic apparel and
gifts. The Retail Segment also offers equitable and inclusive
access programs, in which course materials are offered at a reduced
price through a fee charged by the institution or included in
tuition, and delivered to students on or before the first day of
class. Additionally, the Retail Segment offers a suite of digital
content and services to colleges and universities, including a
variety of open educational resource-based courseware.
- The Wholesale Segment is comprised of our wholesale textbook
business and is one of the largest textbook wholesalers in the
country. The Wholesale Segment centrally sources, sells, and
distributes new and used textbooks to approximately 3,000 physical
bookstores (including our Retail Segment's 774 physical bookstores)
and sources and distributes new and used textbooks to our 592
virtual bookstores. Additionally, the Wholesale Segment sells
hardware and a software suite of applications that provides
inventory management and point-of-sale solutions to approximately
340 college bookstores.
Corporate Services represents unallocated shared-service costs
which include corporate level expenses and other governance
functions, including executive functions, such as accounting,
legal, treasury, information technology, and human resources.
All material intercompany accounts and transactions have been
eliminated in consolidation.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Consolidated Statements of
Operations (Unaudited)
(In thousands, except per
share data)
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Sales:
Product sales and other
$
201,849
$
205,580
$
1,406,655
$
1,362,380
Rental income
39,998
45,597
136,553
133,354
Total sales
241,847
251,177
1,543,208
1,495,734
Cost of sales (exclusive of depreciation
and amortization expense):
Product and other cost of sales
161,694
155,463
1,119,482
1,076,243
Rental cost of sales
21,871
23,563
74,287
76,659
Total cost of sales
183,565
179,026
1,193,769
1,152,902
Gross profit
58,282
72,151
349,439
342,832
Selling and administrative expenses
76,475
79,898
357,611
353,968
Depreciation and amortization expense
10,899
10,996
42,163
42,124
Impairment loss (non-cash) (a)
—
—
6,008
6,411
Restructuring and other charges (a)
5,341
(2,123
)
10,103
944
Operating loss
(34,433
)
(16,620
)
(66,446
)
(60,615
)
Interest expense, net
7,011
2,287
22,683
10,096
Loss from continuing operations before
income taxes
(41,444
)
(18,907
)
(89,129
)
(70,711
)
Income tax expense (benefit)
408
(9,608
)
1,011
(9,152
)
Loss from continuing operations
(41,852
)
(9,299
)
(90,140
)
(61,559
)
Loss from discontinued operations, net of
tax of $101, $142, $398, and $497, respectively
(4,398
)
(1,657
)
(11,722
)
(7,298
)
Net loss
$
(46,250
)
$
(10,956
)
$
(101,862
)
$
(68,857
)
Loss per common share:
Basic and Diluted
Continuing operations
$
(0.80
)
$
(0.18
)
$
(1.72
)
$
(1.19
)
Discontinued operations
$
(0.08
)
$
(0.03
)
$
(0.22
)
$
(0.14
)
Total Basic and Diluted Earnings per
share
$
(0.88
)
$
(0.21
)
$
(1.94
)
$
(1.33
)
Weighted average common shares outstanding
- Basic and Diluted:
52,604
52,046
52,454
51,797
(a) For additional information, see the
Notes in the Non-GAAP disclosure information of this Press
Release.
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Percentage of sales:
Sales:
Product sales and other
83.5
%
81.8
%
91.2
%
91.1
%
Rental income
16.5
%
18.2
%
8.8
%
8.9
%
Total sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales (exclusive of depreciation
and amortization expense):
Product and other cost of sales (a)
80.1
%
75.6
%
79.6
%
79.0
%
Rental cost of sales (a)
54.7
%
51.7
%
54.4
%
57.5
%
Total cost of sales
75.9
%
71.3
%
77.4
%
77.1
%
Gross profit
24.1
%
28.7
%
22.6
%
22.9
%
Selling and administrative expenses
31.6
%
31.8
%
23.2
%
23.7
%
Depreciation and amortization
4.5
%
4.4
%
2.7
%
2.8
%
Impairment loss (non-cash)
—
%
—
%
0.4
%
0.4
%
Restructuring and other charges
2.2
%
(0.8
)%
0.7
%
0.1
%
Operating loss
(14.2
)%
(6.6
)%
(4.3
)%
(4.1
)%
Interest expense, net
2.9
%
0.9
%
1.5
%
0.7
%
Loss from continuing operations before
income taxes
(17.1
)%
(7.5
)%
(5.8
)%
(4.7
)%
Income tax expense (benefit)
0.2
%
(3.8
)%
0.1
%
(0.6
)%
Loss from continuing operations
(17.3
)%
(3.7
)%
(5.8
)%
(4.1
)%
(a) Represents the percentage these costs
bear to the related sales, instead of total sales.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited) (In thousands, except per share data)
April 29, 2023
April 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
14,219
$
8,795
Receivables, net
92,512
136,001
Merchandise inventories, net
322,979
293,854
Textbook rental inventories
30,349
29,612
Prepaid expenses and other current
assets
49,512
59,899
Assets held for sale, current
27,430
3,544
Total current assets
537,001
531,705
Property and equipment, net
68,153
73,584
Operating lease right-of-use assets
246,972
286,584
Intangible assets, net
110,632
126,993
Deferred tax assets, net
132
—
Other noncurrent assets
17,889
24,547
Assets held for sale, noncurrent
—
28,140
Total assets
$
980,779
$
1,071,553
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
267,923
$
182,617
Accrued liabilities
85,759
88,540
Current operating lease liabilities
99,980
97,143
Short-term borrowings
—
40,000
Liabilities held for sale
8,423
7,102
Total current liabilities
462,085
415,402
Long-term deferred taxes, net
1,970
1,430
Long-term operating lease liabilities
184,754
219,594
Other long-term liabilities
19,068
21,053
Long-term borrowings
182,151
185,700
Total liabilities
850,028
843,179
Commitments and contingencies
—
—
Stockholders' equity:
Preferred stock, $0.01 par value;
authorized, 5,000 shares; issued and outstanding, none
—
—
Common stock, $0.01 par value; authorized,
200,000 shares; issued, 55,140 and 54,234 shares, respectively;
outstanding, 52,604 and 52,046 shares, respectively
551
542
Additional paid-in-capital
745,932
740,838
Accumulated deficit
(593,356
)
(491,494
)
Treasury stock, at cost
(22,376
)
(21,512
)
Total stockholders' equity
130,751
228,374
Total liabilities and stockholders'
equity
$
980,779
$
1,071,553
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Consolidated Statements of
Cash Flow (Unaudited)
(In thousands, except per
share data)
52 weeks ended
April 29, 2023
April 30, 2022
Cash flows from operating activities:
Net loss
$
(101,862
)
$
(68,857
)
Less: Loss from discontinued operations,
net of tax
(11,722
)
(7,298
)
Loss from continuing operations
(90,140
)
(61,559
)
Adjustments to reconcile net loss from
continuing operations to net cash flows from operating activities
from continuing operations:
Depreciation and amortization expense
42,163
42,124
Content amortization expense
26
386
Amortization of deferred financing
costs
3,129
1,472
Impairment loss (non-cash) (a)
6,008
6,411
Merchandise inventory loss (a)
—
434
Deferred taxes
409
(17,838
)
Stock-based compensation expense
4,715
5,726
Changes in operating lease right-of-use
assets and liabilities
5,912
(8,475
)
Changes in other long-term assets and
liabilities and other, net
2,711
(3,291
)
Changes in other operating assets and
liabilities, net:
Receivables, net
43,489
(15,532
)
Merchandise inventories
(29,125
)
(13,176
)
Textbook rental inventories
(737
)
(920
)
Prepaid expenses and other current
assets
19,610
2,100
Accounts payable and accrued
liabilities
82,343
45,943
Changes in other operating assets and
liabilities, net
115,580
18,415
Net cash flows provided by (used in)
operating activities from continuing operations
90,513
(16,195
)
Net cash flows provided by operating
activities from discontinued operations
1,157
17,356
Net cash flows provided by operating
activities
$
91,670
$
1,161
Cash flows from investing activities:
Purchases of property and equipment
$
(25,092
)
$
(33,607
)
Changes in other noncurrent assets and
other
591
872
Net cash flows used in investing
activities from continuing operations
(24,501
)
(32,735
)
Net cash flows used in investing
activities from discontinued operations
(6,542
)
(9,926
)
Net cash flows used in investing
activities
$
(31,043
)
$
(42,661
)
Cash flows from financing activities:
Proceeds from borrowings
$
590,303
$
632,220
Repayments of borrowings
(631,849
)
(584,120
)
Payment of deferred financing costs
(7,265
)
(265
)
Purchase of treasury shares
(864
)
(2,370
)
Proceeds from the exercise of stock
options, net
—
256
Net cash flows (used in) provided by
financing activities from continuing operations
(49,675
)
45,721
Net cash flows provided by financing
activities from discontinued operations
—
—
Net cash flows (used in) provided by
financing activities
$
(49,675
)
$
45,721
Net increase in cash, cash equivalents,
and restricted cash
$
10,952
$
4,221
Cash, cash equivalents, and restricted
cash at beginning of period
21,036
16,815
Cash, cash equivalents, and restricted
cash at end of period
31,988
21,036
Less: Cash and cash equivalents of
discontinued operations at end of period
(1,057
)
(696
)
Cash, cash equivalents, and restricted
cash of continuing operations at end of period
$
30,931
$
20,340
Supplemental cash flow information:
Cash paid during the period for:
Interest paid
$
19,024
$
8,166
Income taxes paid (net of refunds)
$
(15,216
)
$
(8,007
)
(a) For additional information, see the
Notes in the Non-GAAP disclosure information of this Press
Release.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Segment Information -
Continuing Operations (Unaudited)
(In thousands, except
percentages)
Segment Information (a) - Continuing
Operations
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Sales
Retail (b)
$
235,350
$
245,503
$
1,491,726
$
1,439,664
Wholesale
9,205
9,054
106,366
112,246
Eliminations
(2,708
)
(3,380
)
(54,884
)
(56,176
)
Total Sales
$
241,847
$
251,177
$
1,543,208
$
1,495,734
Gross Profit
Retail (c)
$
58,923
$
76,890
$
331,370
$
323,803
Wholesale
(747
)
(4,347
)
18,275
19,782
Eliminations
106
(356
)
(180
)
67
Total Gross Profit
$
58,282
$
72,187
$
349,465
$
343,652
Selling and Administrative Expenses
Retail
$
68,887
$
72,647
$
320,730
$
315,124
Wholesale
3,475
3,681
15,036
16,000
Corporate Services
4,139
3,595
22,000
23,002
Eliminations
(26
)
(25
)
(155
)
(158
)
Total Selling and Administrative
Expenses
$
76,475
$
79,898
$
357,611
$
353,968
Segment Adjusted EBITDA (Non-GAAP) (d)
Retail
$
(9,964
)
$
4,243
$
10,640
$
8,679
Wholesale
(4,222
)
(8,028
)
3,239
3,782
Corporate Services
(4,139
)
(3,595
)
(22,000
)
(23,002
)
Eliminations
132
(331
)
(25
)
225
Total Segment Adjusted EBITDA
(Non-GAAP)
$
(18,193
)
$
(7,711
)
$
(8,146
)
$
(10,316
)
Percentage of Segment Sales
Gross Profit
Retail (c)
25.0
%
31.3
%
22.2
%
22.5
%
Wholesale
(8.1
)%
(48.0
)%
17.2
%
17.6
%
Total Gross Profit
24.1
%
28.7
%
22.6
%
23.0
%
Selling and Administrative Expenses
Retail
29.3
%
29.6
%
21.5
%
21.9
%
Wholesale
37.8
%
40.7
%
14.1
%
14.3
%
Total Selling and Administrative
Expenses
31.6
%
31.8
%
23.2
%
23.7
%
(a)
See Explanatory Note in this Press Release
for Segment descriptions.
(b)
In December 2020, we entered into
merchandising partnership with Fanatics Retail Group Fulfillment,
LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. D/B/A "Lids"
(“Lids”) (collectively referred to herein as the “F/L
Partnership”). Effective in April 2021, as contemplated by the F/L
Partnership's merchandising agreement and e-commerce agreement, we
began to transition the fulfillment of our logo general merchandise
sales to Lids and Fanatics. The transition to Lids for campus
stores was effective in April 2021, and the e-commerce websites
transitioned to Fanatics throughout fiscal 2022. As the logo
general merchandise sales are fulfilled by Lids and Fanatics, we
recognize commission revenue earned for these sales on a net basis
in our consolidated financial statements, as compared to the
recognition of logo general merchandise sales on a gross basis in
the periods prior to the transition. For Retail Gross Comparable
Store Sales details, see the Sales Information disclosure of this
Press Release.
(c)
For the 13 and 52 weeks ended April 29,
2023, the Retail Segment gross margin excludes $0 and $26
respectively, of amortization expense (non-cash) related to content
development costs. For the 13 and 52 weeks ended April 30, 2022,
the Retail Segment gross margin excludes $36 and $386 respectively,
of amortization expense (non-cash) related to content development
costs. Additionally, for the 52 weeks ended April 30, 2022, gross
margin excludes a merchandise inventory loss of $434 in the Retail
Segment related to the sale of our logo general merchandise
inventory below cost to Lids.
(d)
For additional information, including a
reconciliation to the most comparable financial measures presented
in accordance with GAAP, see "Non-GAAP Information" and "Use of
Non-GAAP Financial Information" in the Non-GAAP disclosure
information of this Press Release.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Segment Information -
Discontinued Operations (Unaudited)
(In thousands, except
percentages)
During the fourth quarter of fiscal 2023, assets related to our
Digital Student Solutions ("DSS") Segment met the criteria for
classification as Assets Held for Sale and Discontinued Operations
and is no longer a reportable segment. Certain assets and
liabilities associated with the DSS Segment are presented in our
consolidated balance sheets as "Assets Held for Sale" and
"Liabilities Held for Sale". The results of operations related to
the DSS Segment are included in the consolidated statements of
operations as "Loss from discontinued operations, net of tax." The
cash flows of the DSS Segment are also presented separately in our
consolidated statements of cash flows.
On May 31, 2023, subsequent to the end of fiscal 2023, we
completed the sale of these assets related to our DSS Segment for
cash proceeds of $20 million, net of certain transaction fees,
severance costs, escrow, and other considerations. During the first
quarter of fiscal 2024, we expect to record a Gain on Sale of
Business in the range of $2.5 million to $4.5 million. Net cash
proceeds from the sale were used for debt repayment and to provide
additional funds for working capital needs under our Credit
Facility.
The following table summarizes the operating results of the
discontinued operations for the periods indicated:
Segment Information - Discontinued
Operations
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Total sales
$
8,694
$
9,654
$
35,353
$
35,666
Cost of sales (a)
1,873
1,594
7,156
5,738
Gross profit (a)
6,821
8,060
28,197
29,928
Selling and administrative expenses
10,228
7,945
34,137
29,472
Depreciation and amortization
509
1,630
3,155
7,257
Restructuring costs (b)
—
—
1,848
—
Transaction costs (c)
381
—
381
—
Operating loss
(4,297
)
(1,515
)
(11,324
)
(6,801
)
Income tax expense
101
142
398
497
Loss from discontinued operations
$
(4,398
)
$
(1,657
)
$
(11,722
)
$
(7,298
)
13 weeks ended
52 weeks ended
Adjusted EBITDA (non-GAAP) -
Discontinued Operations
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Loss from discontinued operations
$
(4,398
)
$
(1,657
)
$
(11,722
)
$
(7,298
)
Add:
Depreciation and amortization expense
509
1,630
3,155
7,257
Income tax expense (benefit)
101
142
398
497
Content amortization (non-cash)
1,739
1,434
6,594
5,068
Restructuring and other charges
—
—
1,848
—
Transaction costs
381
—
381
—
Adjusted EBITDA (Non-GAAP) - Total
$
(1,668
)
$
1,549
$
654
$
5,524
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Sales Information
(Unaudited)
Total Sales - Continuing Operations
The components of the sales variances for the 13 and 52 week
periods are as follows:
Dollars in millions
13 weeks ended
52 weeks ended
Retail Sales
April 29, 2023
April 29, 2023
New stores (a)
$
4.7
$
78.3
Closed stores (a)
(5.4
)
(46.4
)
Comparable stores (b)
(3.6
)
25.7
Textbook rental deferral
(5.6
)
0.9
Service revenue (c)
(0.4
)
(3.8
)
Other (d)
0.1
(2.6
)
Retail Sales subtotal:
$
(10.2
)
$
52.1
Wholesale Sales
$
0.2
$
(5.9
)
Eliminations (e)
$
0.7
$
1.3
Total sales variance
$
(9.3
)
$
47.5
(a)
The following is a store count
summary for physical stores and virtual stores:
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Number of Stores:
Physical
Virtual
Total
Physical
Virtual
Total
Physical
Virtual
Total
Physical
Virtual
Total
Beginning of period
785
603
1,388
799
642
1,441
805
622
1,427
769
648
1,417
Stores opened
2
2
4
10
—
10
36
30
66
57
35
92
Stores closed
13
13
26
4
20
24
67
60
127
21
61
82
End of period
774
592
1,366
805
622
1,427
774
592
1,366
805
622
1,427
(b)
In December 2020, we entered into
merchandising partnership with Fanatics Retail Group Fulfillment,
LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. D/B/A "Lids"
(“Lids”) (collectively referred to herein as the “F/L
Partnership”). Effective in April 2021, as contemplated by the F/L
Partnership's merchandising agreement and e-commerce agreement, we
began to transition the fulfillment of our logo general merchandise
sales to Lids and Fanatics. The transition to Lids for campus
stores was effective in April 2021, and the e-commerce websites
transitioned to Fanatics throughout fiscal 2022. As the logo
general merchandise sales are fulfilled by Lids and Fanatics, we
recognize commission revenue earned for these sales on a net basis
in our consolidated financial statements, as compared to the
recognition of logo general merchandise sales on a gross basis in
the periods prior to the transition. For Retail Gross Comparable
Store Sales details, see below.
(c)
Service revenue includes brand
partnerships, shipping and handling, and revenue from other
programs.
(d)
Other includes inventory liquidation sales
to third parties, marketplace sales and certain accounting
adjusting items related to return reserves, and other deferred
items.
(e)
Eliminates Wholesale sales and service
fees to Retail and Retail commissions earned from Wholesale.
Retail Gross Comparable Store Sales
Retail Gross Comparable Store Sales variances by category are as
follows:
Dollars in millions
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Textbooks (Course Materials)
$
0.9
1.0
%
$
3.5
4.0
%
$
4.1
0.4
%
$
21.2
2.3
%
General Merchandise
1.2
0.9
%
51.8
63.3
%
43.9
8.6
%
219.5
75.6
%
Total Retail Gross Comparable Store
Sales
$
2.1
0.9
%
$
55.3
32.6
%
$
48.0
3.2
%
$
240.7
19.6
%
To supplement the Total Sales table presented above, the Company
uses Retail Gross Comparable Store Sales as a key performance
indicator. Retail Gross Comparable Store Sales includes sales from
physical and virtual stores that have been open for an entire
fiscal year period and does not include sales from permanently
closed stores for all periods presented. For Retail Gross
Comparable Store Sales, sales for logo general merchandise
fulfilled by Lids, Fanatics and digital agency sales are included
on a gross basis for consistent year-over-year comparison.
Effective in April 2021, as contemplated by the F/L
Partnership's merchandising agreement and e-commerce agreement, we
began to transition the fulfillment of our logo general merchandise
sales to Lids and Fanatics. The transition to Lids for campus
stores was effective in April 2021, and the e-commerce websites
transitioned to Fanatics throughout fiscal 2022. As the logo
general merchandise sales are fulfilled by Lids and Fanatics, we
recognize commission revenue earned for these sales on a net basis
in our consolidated financial statements, as compared to the
recognition of logo general merchandise sales on a gross basis in
the periods prior to the transition.
We believe the current Retail Gross Comparable Store Sales
calculation method reflects management’s view that such comparable
store sales are an important measure of the growth in sales when
evaluating how established stores have performed over time. We
present this metric as additional useful information about the
Company’s operational and financial performance and to allow
greater transparency with respect to important metrics used by
management for operating and financial decision-making. Retail
Gross Comparable Store Sales are also referred to as "same-store"
sales by others within the retail industry and the method of
calculating comparable store sales varies across the retail
industry. As a result, our calculation of comparable store sales is
not necessarily comparable to similarly titled measures reported by
other companies and is intended only as supplemental information
and is not a substitute for net sales presented in accordance with
GAAP.
BARNES & NOBLE EDUCATION,
INC. AND SUBSIDIARIES
Non-GAAP Information (a)
(Unaudited)
(In thousands)
Consolidated Adjusted Earnings
(non-GAAP) (a) - Continuing Operations
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Net loss from continuing operations
$
(41,852
)
$
(9,299
)
$
(90,140
)
$
(61,559
)
Reconciling items, after-tax (below)
5,341
(2,087
)
16,137
8,175
Adjusted Earnings (Non-GAAP)
$
(36,511
)
$
(11,386
)
$
(74,003
)
$
(53,384
)
Reconciling items, pre-tax
Impairment loss (non-cash) (b)
$
—
$
—
$
6,008
$
6,411
Merchandise inventory loss (c)
—
—
—
434
Content amortization (non-cash) (d)
—
36
26
386
Restructuring and other charges (e)
5,341
(2,123
)
10,103
944
Reconciling items, pre-tax
5,341
(2,087
)
16,137
8,175
Less: Pro forma income tax impact (f)
—
—
—
—
Reconciling items, after-tax
$
5,341
$
(2,087
)
$
16,137
$
8,175
Consolidated Adjusted EBITDA (non-GAAP)
(a)
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Net loss from continuing operations
$
(41,852
)
$
(9,299
)
$
(90,140
)
$
(61,559
)
Add:
Depreciation and amortization expense
10,899
10,996
42,163
42,124
Interest expense, net
7,011
2,287
22,683
10,096
Income tax expense (benefit)
408
(9,608
)
1,011
(9,152
)
Impairment loss (non-cash) (b)
—
—
6,008
6,411
Merchandise inventory loss (c)
—
—
—
434
Content amortization (non-cash) (d)
—
36
26
386
Restructuring and other charges (e)
5,341
(2,123
)
10,103
944
Adjusted EBITDA (Non-GAAP) - Continuing
Operations
$
(18,193
)
$
(7,711
)
$
(8,146
)
$
(10,316
)
Adjusted EBITDA (Non-GAAP) - Discontinued
Operations (g)
$
(1,668
)
$
1,549
$
654
$
5,524
Adjusted EBITDA (Non-GAAP) - Total
$
(19,861
)
$
(6,162
)
$
(7,492
)
$
(4,792
)
Adjusted EBITDA by Segment (non-GAAP) (a) - Continuing
Operations
The following is Adjusted EBITDA by Segment for Continuing
Operations for the 13 and 52 week periods:
13 weeks ended April 29, 2023
Retail
Wholesale
Corporate Services (h)
Eliminations
Total
Net (loss) income from continuing
operations
$
(21,066
)
$
(5,504
)
$
(15,414
)
$
132
$
(41,852
)
Add:
Depreciation and amortization expense
9,590
1,297
12
—
10,899
Interest expense, net
—
—
7,011
—
7,011
Income tax expense
—
—
408
—
408
Restructuring and other charges (e)
1,512
(15
)
3,844
—
5,341
Adjusted EBITDA (non-GAAP)
$
(9,964
)
$
(4,222
)
$
(4,139
)
$
132
$
(18,193
)
13 weeks ended April 30, 2022
Retail
Wholesale
Corporate Services (h)
Eliminations
Total
Net (loss) income from continuing
operations
$
(5,418
)
$
(7,255
)
$
3,705
$
(331
)
$
(9,299
)
Add:
Depreciation and amortization expense
9,620
1,358
18
—
10,996
Interest expense, net
—
—
2,287
—
2,287
Income tax benefit
—
—
(9,608
)
—
(9,608
)
Content amortization (non-cash) (d)
36
—
—
—
36
Restructuring and other charges (e)
5
(2,131
)
3
—
(2,123
)
Adjusted EBITDA (non-GAAP)
$
4,243
$
(8,028
)
$
(3,595
)
$
(331
)
$
(7,711
)
52 weeks ended April 29, 2023
Retail
Wholesale
Corporate Services (h)
Eliminations
Total
Net loss from continuing operations
$
(35,095
)
$
(3,050
)
$
(51,970
)
$
(25
)
$
(90,140
)
Add:
Depreciation and amortization expense
36,737
5,373
53
—
42,163
Interest expense, net
—
—
22,683
—
22,683
Income tax expense
—
—
1,011
—
1,011
Impairment loss (non-cash) (b)
6,008
—
—
—
6,008
Content amortization (non-cash) (d)
26
—
—
—
26
Restructuring and other charges (e)
2,964
916
6,223
—
10,103
Adjusted EBITDA (non-GAAP)
$
10,640
$
3,239
$
(22,000
)
$
(25
)
$
(8,146
)
52 weeks ended April 30, 2022
Retail
Wholesale
Corporate Services (h)
Eliminations
Total
Net (loss) income from continuing
operations
$
(37,305
)
$
495
$
(24,974
)
$
225
$
(61,559
)
Add:
Depreciation and amortization expense
36,635
5,418
71
—
42,124
Interest expense, net
—
—
10,096
—
10,096
Income tax benefit
—
—
(9,152
)
—
(9,152
)
Impairment loss (non-cash) (b)
6,411
—
—
—
6,411
Merchandise inventory loss (c)
434
—
—
—
434
Content amortization (non-cash) (d)
386
—
—
—
386
Restructuring and other charges (e)
2,118
(2,131
)
957
—
944
Adjusted EBITDA (non-GAAP)
$
8,679
$
3,782
$
(23,002
)
$
225
$
(10,316
)
(a)
For additional information, see "Use of
Non-GAAP Financial Information" in the Non-GAAP disclosure
information of this Press Release.
(b)
During the 52 weeks ended April 29, 2023,
we evaluated certain of our store-level long-lived assets in the
Retail segment for impairment. Based on the results of the
impairment tests, we recognized an impairment loss (non-cash) of
$6,008 (both pre-tax and after-tax) comprised of $708, $1,697,
$3,599 and $4 of property and equipment, operating lease
right-of-use assets, amortizable intangibles, and other noncurrent
assets, respectively.
During the 52 weeks ended April 30, 2022,
we evaluated certain of our store-level long-lived assets in the
Retail segment for impairment. Based on the results of the
impairment tests, we recognized an impairment loss (non-cash) of
$6,411 (both pre-tax and after-tax) comprised of $739, $1,793,
$3,668 and $211 of property and equipment, operating lease
right-of-use assets, amortizable intangibles, and other noncurrent
assets, respectively.
(c)
As contemplated by the F/L Partnership's
merchandising agreement, we sold our logo general merchandise
inventory to Lids and received proceeds of $41,773, and recognized
a merchandise inventory loss on the sale of $10,262 in cost of
goods sold during the 52 weeks ended May 1, 2021 for the Retail
Segment. The final inventory sale price was determined during the
first quarter of fiscal 2022, at which time, we received additional
proceeds of $1,906, and recognized a merchandise inventory loss on
the sale of $434 in cost of goods sold for the Retail Segment.
(d)
Represents amortization of content
development costs (non-cash) recorded in cost of goods sold in the
consolidated financial statements.
(e)
During the 52 weeks ended April 29, 2023
and April 30, 2022, we recognized restructuring and other charges
totaling $10,103 and $944, respectively, comprised primarily of
severance and other employee termination and benefit costs
associated with the elimination of various positions as part of
cost reduction objectives, professional service costs for
restructuring, process improvements, costs related to development
and integration associated with the F/L Partnership, and an
actuarial gains related to a frozen retirement benefit plan
(non-cash).
(f)
There is no pro forma income effect of the
non-GAAP items.
(g)
For additional information, see "Segment
Information - Discontinued Operations" of this Press Release.
(h)
Interest expense is reflected in Corporate
Services as it is primarily related to our Credit Agreement which
funds our operating and financing needs across the organization.
Income taxes are reflected in Corporate Services as we record our
income tax provision on a consolidated basis.
Free Cash Flow (non-GAAP) (a) - Continuing Operations
13 weeks ended
52 weeks ended
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Net cash flows provided by (used in)
operating activities from continuing operations
$
111,762
$
(18,255
)
$
90,513
$
(16,195
)
Less:
Capital expenditures (b)
3,391
7,413
25,092
33,607
Cash interest paid
5,618
2,184
19,024
8,166
Cash taxes refund
(63
)
(264
)
(16,005
)
(8,088
)
Free Cash Flow (non-GAAP)
$
102,816
$
(27,588
)
$
62,402
$
(49,880
)
(a)
For additional information, see "Use of
Non-GAAP Financial Information" in the Non-GAAP disclosure
information of this Press Release.
(b)
Purchases of property and equipment are
also referred to as capital expenditures. Our investing activities
consist principally of capital expenditures for contractual capital
investments associated with renewing existing contracts, new store
construction, and enhancements to internal systems and our website.
The following table provides the components of total purchases of
property and equipment:
Capital Expenditures
13 weeks ended
52 weeks ended
- Continuing Operations
April 29, 2023
April 30, 2022
April 29, 2023
April 30, 2022
Physical store capital expenditures
$
820
$
3,645
$
13,068
$
16,206
Product and system development
2,163
3,439
10,030
14,867
Other
408
329
1,994
2,534
Total Capital Expenditures
$
3,391
$
7,413
$
25,092
$
33,607
Use of Non-GAAP Financial Information -
Adjusted Earnings, Adjusted EBITDA, Adjusted EBITDA by Segment, and
Free Cash Flow
To supplement the Company’s consolidated
financial statements presented in accordance with generally
accepted accounting principles (“GAAP”), in the Press Release
attached hereto as Exhibit 99.1, the Company uses the financial
measures of Adjusted Earnings, Adjusted EBITDA, Adjusted EBITDA by
Segment and Free Cash Flow, which are non-GAAP financial measures
under Securities and Exchange Commission (the "SEC") regulations.
We define Adjusted Earnings as net income (loss) from continuing
operations adjusted for certain reconciling items that are
subtracted from or added to net income (loss) from continuing
operations. We define Adjusted EBITDA as net income (loss) from
continuing operations plus (1) depreciation and amortization; (2)
interest expense and (3) income taxes, (4) as adjusted for items
that are subtracted from or added to net income (loss) from
continuing operations. We define Free Cash Flow as Cash Flows from
Operating Activities from continuing operations less capital
expenditures, cash interest and cash taxes.
The non-GAAP measures included in the
Press Release have been reconciled to the most comparable financial
measures presented in accordance with GAAP, attached hereto as
Exhibit 99.1, as follows: the reconciliation of Adjusted Earnings
to net income (loss) from continuing operations; the reconciliation
of consolidated Adjusted EBITDA to consolidated net income (loss)
from continuing operations; and the reconciliation of Adjusted
EBITDA by Segment to net income (loss) from continuing operations
by segment. All of the items included in the reconciliations are
either (i) non-cash items or (ii) items that management does not
consider in assessing our on-going operating performance.
These non-GAAP financial measures are not
intended as substitutes for and should not be considered superior
to measures of financial performance prepared in accordance with
GAAP. In addition, the Company's use of these non-GAAP financial
measures may be different from similarly named measures used by
other companies, limiting their usefulness for comparison
purposes.
We review these non-GAAP financial
measures as internal measures to evaluate our performance at a
consolidated level and at a segment level and manage our
operations. We believe that these measures are useful performance
measures which are used by us to facilitate a comparison of our
on-going operating performance on a consistent basis from
period-to-period. We believe that these non-GAAP financial measures
provide for a more complete understanding of factors and trends
affecting our business than measures under GAAP can provide alone,
as they exclude certain items that management believes do not
reflect the ordinary performance of our operations in a particular
period. Our Board of Directors and management also use Adjusted
EBITDA and Adjusted EBITDA by Segment, at a consolidated level and
at a segment level, as one of the primary methods for planning and
forecasting expected performance, for evaluating on a quarterly and
annual basis actual results against such expectations, and as a
measure for performance incentive plans. Management also uses
Adjusted EBITDA by Segment to determine segment capital
allocations. We believe that the inclusion of Adjusted Earnings,
Adjusted EBITDA, and Adjusted EBITDA by Segment results provides
investors useful and important information regarding our operating
results, in a manner that is consistent with management’s
evaluation of business performance. We believe that Free Cash Flow
provides useful additional information concerning cash flow
available to meet future debt service obligations and working
capital requirements and assists investors in their understanding
of our operating profitability and liquidity as we manage the
business to maximize margin and cash flow.
The Company urges investors to carefully
review the GAAP financial information included as part of the
Company’s Form 10-K dated April 29, 2023 filed with the SEC on July
31, 2023, which includes consolidated financial statements for each
of the three years for the period ended April 29, 2023, April 30,
2022, and May 1, 2021 (Fiscal 2023, Fiscal 2022, and Fiscal 2021,
respectively) and the Company's Quarterly Reports on Form 10-Q for
the period ended July 30, 2022 filed with the SEC on August 31,
2022, the Company's Quarterly Report on Form 10-Q for the period
ended October 29, 2022 filed with the SEC on December 6, 2022, and
the Company's Quarterly Report on Form 10-Q for the period ended
January 28, 2023 filed with the SEC on March 9, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230720690873/en/
Investor Contact: Hunter
Blankenbaker Vice President, Corporate Communications and Investor
Relations 908-991-2776 hblankenbaker@bned.com
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