Barnes & Noble Education Reports Decline in Sales and Widened Loss in Latest Quarter

Barnes & Noble Education, Inc. (BNED) reported its financial results for the 13 weeks ended July 27, 2024, revealing a slight decline in total sales to $263.4 million, down from $264.2 million in the same period of 2023. Product sales and other revenues decreased to $250.9 million from $252.7 million year-over-year. The company's gross profit also fell to $47.2 million, compared to $50.6 million in the prior year, reflecting a decrease in gross margin from 19.2% to 17.9%.

The operating loss for the quarter widened significantly to $(91.7) million, compared to $(41.7) million in the same period last year. This increase in loss was attributed to a loss on extinguishment of debt of $(55.2) million related to the conversion of Term Loan principal into common stock, as well as restructuring charges totaling $3.6 million, primarily due to severance costs following the resignation of the former CEO. The net loss for the quarter was $(99.5) million, compared to $(50.4) million in the previous year.

Despite the overall decline in sales, the company experienced growth in its BNC First Day® programs, which contributed to a 9.8% increase in course material product sales to $152.1 million. However, general merchandise sales decreased by 13.7% to $76.5 million, primarily due to closed stores and lower graduation product sales. The company opened 30 new stores but closed 111, resulting in an estimated net annual sales loss of $(71) million.

On the balance sheet, total current assets increased slightly to $601.4 million, while total assets decreased to $1.0 billion from $1.1 billion a year earlier. Total liabilities also decreased to $860.8 million from $989.8 million, and total stockholders' equity rose to $144.4 million from $81.1 million in the prior year.

In terms of cash flow, BNED reported net cash flows used in operating activities of $(144.0) million, an increase from $(119.9) million in the same period last year. The company raised approximately $95 million through a private equity investment and a rights offering, which helped improve its financial flexibility. The Credit Facility was refinanced to provide access to a $325 million facility maturing in June 2028, enhancing the company's liquidity position.

Overall, BNED's performance reflects ongoing challenges in the retail environment, particularly in general merchandise sales, while strategic initiatives like the BNC First Day® programs are showing potential for future growth.