Earnings call transcript Q4 2023

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Operator

Thank you for standing by. My name is Maria, and I will be your conference operator today. At this time, I would like to welcome everyone to the Barnes & Noble Education Fiscal 2023 Fourth Quarter Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Mr. of President Vice Blankenbaker, Investor Relations. Hunter Mr. go please ahead. Blankenbaker,

Hunter Blankenbaker

morning, Okay. quarter to welcome Maria, earnings good Great. and everyone, our call. and Thanks, conference fiscal XXXX fourth

call Joining Legal our Mike Executive EVP President, due Corporate family Development and Executive today Barnes Jonathan Treasurer. and Huseby, Noble Jason of us Officer, our Snagusky, emergency. Affairs, be and SVP Chief & Miller, Chief Retail, on and a will President, Vice Mike College; and today are Officer; our the BNED to not Shar, our

are Before we in without I'd by not other like rebroadcast by this call any you and remind the written make Noble used to press covered our prior for we contents on begin Barnes the documents. property The are of contained and call call, or party of that are Education. Education Barnes public statements disclaimer consent & of release & safe harbor today's Noble

those and with we call, disclaims current assumptions this forward-looking During to are that based including are in These risks expectations projections call. will obligation The about Securities upon Commission. and update and subject our forward-looking statements company discussed with and be press Exchange filings contained public any made may statements future the events. uncertainties, this statements that and predictions, other to or make statements any release during

that, now over I'll Mike turn with so Miller. call And the to

Mike Miller

us appreciate We joining everyone. today. morning, good you and Hunter, Thanks,

sustained While We results significant and made in business strengthen transform the did not profitable XXXX environment operating progress remained our growth. expectations. challenging for meet fiscal our to and the

the and of operating reduce normal 'XX, with of post-pandemic We we aligned our environment. efficiency in our believe our of operating the across half cost decisive took second is aspects we fiscal action what the revenue appropriately new costs business. all to increase structure In

the like FDC First access model. serve more Day schools the We to equitable of we our or Complete also accelerated transition profitable subscription

and a the equitable schools becoming the grown we've material importantly, rapidly changed number program, course model momentum the added we revenue 'XX, publishers access industry consecutive and The XX%, years. innovative equitable faculty, fall Through and most have fiscal business of standard record material course of this access In grew students. institutions, is for term. for X XX the for FDC

Additionally, strategy disclosed divested to liquidity our employees transition First business Student our on and allocation for business. faculties, Digital growing merchandise of execution last we to on and students, the strengthened we benefit our Solutions shareholders. Complete focus week, our the and our accelerate continued BNED's lastly, financial to of as general alumni Day And capital our fans, deepen position educators,

of have modified the and the efficiently. agreement, debt our certain facilities maturity ability certain restricted to Under extended we operate amended other terms covenants that our agreements of the

our constructively worked company. stakeholders today enables partners have to evaluate and a the resolution pleased us for are with our investors preserves strategic that We financial the and reach long-term to opportunities best value to for

our initiatives. to 'XX, the growth for greatest that Given before With opportunities to 'XX well in fiscal the review a to Jonathan fiscal and strategic 'XX I'll turning over next our fourth our of financial several as review a it years. backdrop, 'XX fiscal quarter provide results over on Shar clear significant efficient we a company fiscal are a strength business positioned we changes our made more profitable focus with entering and and

Following remarks. that, guidance and discuss closing our 'XX I'll fiscal

negative million fiscal operations revenue billion turn results. 'XX grew by from Consolidated $X.X of to $X.X by Consolidated to X.X%. let's adjusted million. our EBITDA $X.X grew Now continuing

and Day billion, driven [indiscernible] Day by Retail million First Moving Fiscal to on to increased merchandise our First Complete, sales. 'XX total or general X.X% course retail $XX.X segment. revenue by strong $X.X

In decline Day increased First materials First Complete Day the in in a First increase fiscal traditional revenue, First by First revenues which Day Day material higher predictability model. growth, material in in provides a and course and enhanced will and fiscal material 'XX, Day revenue X.X% The First majority of XX% the approximately revenue a carte la comprised approach XX% the course course by Complete of business. X.X%, 'XX. driven course Day revenues, Total offset Complete

gross convenience. fiscal gross in X.X%, X.X%. retail sales grew store strong 'XX performance by cafe and Total comp Retail comparable general increased emblematic sales merchandise sales X.X%, and course aided in gross increased a material and store merchandise general comparable

costs. of a administrative Fiscal million million, $XX.X EBITDA $X and due primarily selling of 'XX revenue sales $XX million increased offset higher cost retail non-GAAP to increase, and adjusted by

For to million in a course X.X% due the materials, merchandise. carte decrease course XX% Within offset increase material a and decline revenue $XXX.X FDC X.X% retail in general sales fourth decreased primarily X.X%, was in a of decrease by la sales. a quarter, a X.X% in

growth the campus sales. during program BNC's Within XXX merchandise, utilized Day institutions supply stores 'XX courseware in representing in by offset the Lids rates part a convenience and adjustment and calls First enrollment. The in rate cafe the relationship spring delivery as decline was general matured. emblematic which $XXX,XXX declines product in the at of Fanatics sales in total as Complete term agreement, emblematic was by and commission commission in driven year-over-year an decrease for

the compared was organizational Fourth decreased a efficiencies, a and profit, la from year lower EBITDA costs patterns and million within carte course period. initiatives company's course EBITDA million to the simplify compared company's expenses administrative Retail adjusted prior compensation due to shift lower retail which and to $X.X structure materials fourth the and selling negative model. retail quarter the the $XX nonessential reduced or period in year lower due material million textbooks and as non-GAAP $X.X lower-margin to declined digital quarter buying physical to quarter quarter of revenue incentive prior non-GAAP drive in included mix adjusted to Fourth X.X%, fourth expense. gross

year. an inventory last increase of markdowns $X.X higher the gross higher shrink fourth by and approximately Additionally, reserves, in quarter impacted versus million margin

saw third year-over-year revenue fill growth more opportunities, lack of year, and increasing on to Fiscal an the revenue from and bookstores. inventory the basis. supply to $X.X book and wholesale slightly revenue from and the the half prior a BNC 'XX the EBITDA other wholesale. to to decreased In year, in of supply half In fourth million. quarters. the course shift demand at textbook on constraints non-GAAP the purchasing easing caused materials we the enabled 'XX back declined $X.X enabling $XXX.X constraints million of in to of used to digital million X.X% Moving decline This adjusted us year. Fiscal wholesale first

merchandise our Complete. Day our First through to 'XX. the to in line primary top ability grow Turning We're fiscal initiatives, confident general growth and

expense also disciplined will continue We to increased committed management structure and adjusted to drive cost and we our optimize fully revenue EBITDA. core are to

a to Jonathan initiatives. I'd now the turn XXXX to growth deeper over our at call look like to take

Jonathan Shar

and be excellent. In Noble during in semester. Mike, conducted May, platform, from through good Day administration Thanks, students, the who first XXXX Insights, faculty, survey the initiatives, First continues Complete. begin spring & leadership morning, research First students Day everyone. today and X a I'll with Feedback to Complete participated growth Barnes on key with our College a Day academic proprietary of we Complete program

customer the student outcomes. subscription-like experience, impact a equitable academic program BNC's course making material These had is access students through model, success, improved overwhelmingly reported on better achieved and were confirming ultimately a that better prepared they positive

First said success, on insights program the Some from survey it for of the classroom prepared their positive said better current them they that term, at bundled, they continue XX% include Complete Day their grades, key found participants have a the XX% likelihood and materials the had XX% their impact school. stated XX% achieve XX% academic stated course survey were helped they will education stated better that to it convenient increases their

based schools represents upcoming XXXX are post and program the a semester. to the response approximately fall undergraduate XXX fall perspective increase not fall XX% the it's the mind, a the campus committed of enrollment that With of number of First student, enrollment for term. we utilize XXXX. this Complete in of XXXX stores XXX,XXX added Day Currently, for positive surprising record upon now This versus graduate

the hundreds discussing XXXX the to already FDC and fall plus year. schools several schools already pipeline are launching January FDC of for signed semester we making have in 'XX, spring transition robust a to academic have next of commitments that Additionally, in committed

in Beyond sales product led partnership assortment emblematic gross great merchandise continue made to opportunity grow and We our we on store to impressive execution XXXX with merchandise. offering, access which business. general X.X% omnichannel a our equitable our fiscal merchandising and also comparable retail strategic see to an growth Lids, general significant in our through seamless progress throughout experience Fanatics

to implement for fiscal resonate further their extended position from needs period rush that us that innovate us brands to their allow differentiate and strength entering unique optimize customers. are to of continue We assortment and will our of the communities campus continue fall and with allow BNED schools, ensure XXXX to continue to initiatives a our

offering, our is launch continue we to excited strengthening our and we addition of In about to evolve One general Well, business. particularly Be non-emblematic You. merchandise the are initiative Be emblematic amplify

and survey ability goal. Stress that Inside According to student campuses latest impacts learn is succeed health their say large to negatively is reducing and stress and from reinforced College focus, a and stress growing and issue. college anxiety their Ed on voice the Higher Pulse, academically, that students #X

the and and Our Be campus health as to wellness more joy. live events products, You less wide as stress online of a range and on-campus offers collection Be help well with community Well, educational

wholesale, its became competitors supplier more to MBS than market. largest Within exiting of the for XXX due additional primary the X accounts

years. in wholesale the the supporting the bigger we demand result, to course excited time to a a in revenue X play is lead role established in physical education industry, has As meeting of the materials. for expect and higher as fiscal grow itself modestly and provider long-tail the team XXXX first NBS

expense item. to components built ongoing other efficiency deep store and The From expense has a payroll, on are managing and our largest staffing cost an discipline. team which standpoint, of is line levels we rigor committed

allocated payroll the already to better maintaining their results. seeing We maximizing sales while our guidelines, aimed guidelines while be have at will stores we staying payroll sales we within By budget. implementing positive and discipline, our targets positioned these achieve financial believe established are

call I'll remarks. and to back over to guidance now discuss turn closing Mike And the our

Mike Miller

Jonathan. Thanks,

from Moving guidance on continuing to operations.

an general revenue higher, growth physical. As driven la in year-over-year dollars growth be total by expect to the we offset down materials. and be fiscal by Complete digital carte by Day and will driven execute relative gross initiatives, flat slightly be higher course margin on cost First Gross profit to continued we expect the of our declines to reduction we shift XXXX, consolidated merchandise, a to and to however, profit

our year-over-year on closing and and profitable initiatives expect S&A of We to as dollars full the including maintain stores. be we year payroll discipline, realize reduction cost down benefit cost

factors, to be we Given $XX these non-GAAP expect EBITDA adjusted million. XXXX fiscal approximately

employees across values. helped center drive They and country true our outstanding have our revealed Before front company. Noble & continue recognize I the who institutions. past this BNED its students closing, to to transform Barnes we want while to done Education significant character of the and and support change our have the keeping year as This mission

BNED Finally, company valued extremely announced for we higher and path the plays are of with recent executing that strategic ecosystem. available the on role agreement, ongoing committed value within future. in education to for business the are we best the the we facility review stakeholders. the -- maximizing and valuable to best to our credit and an we forward are alternatives our connection ensure our and continuing positioning company

appropriate has be We is commenting further concluded the will of Directors this that required. disclosure not until Board or on

We profitable Underpinning believe growth over towards steps the priority and our helping success. goals the position commitment path universities barriers we to shareholders of colleges our greater value affordability, on to their sustainable, the for term. and for delivering providing and all our have is BNED access, taken highest meet greater and academic and long convenience students actions remove ultimately, right by exceed

phase We we're of BNED's to next with and are very looking forward vision excited sharing journey, about this you. the

you And That any we'll have. concludes may today's prepared remarks. take now questions

Operator

Our Group. of first Alex question comes from line Fuhrman, Capital Craig-Hallum the

Alex Fuhrman

it and expecting material Complete sounds to of side signed the Day be majority more like Complete Day it First required progress getting the schools like upcoming for fall First up this sounds things, First semester, sales year. you're of and Day Great the on courseware

your you're going of substantially to on through walk as look of Complete the about and kind the Can this like you how the Should schools to all Complete meaningful future. start year, there being school? can the First kind take? in Day getting is in First years year. how of that will Can be guidance But churn substantially thinking of walk expect kind me us you for transition Day in to on of the immediately, long update kind of transition through, you we next that what to me not few terms next all giving

Jonathan Shar

question. of the Jonathan. Thanks we Yes, as said Alex, We're it's Day for during growth about the Complete, really First the excited call.

stores We have committed with have even this within several academic this schools Day to discussing year Complete XXX the fiscal in committed fall launching with as First for in and contractually and the and it more following campus noted, schools. many term other more having and to we discussion year to spring of committed already, hundreds already

we so it's campus stakeholders the having the 'XX, higher fall 'XX making is number but a new we significant a the of scaling, and impact balance by not the expect it's XX, and that that on starting all record student significantly, the really to And semester driven key stores outcomes. to for positive it's grow really, in of fact added, impact fact fiscal continue our our for education and we're which in only being that saw fiscal about

campuses our every day growth student-centric to continue Day the having are and to the majority really just to so and transition and impacting very based grow students. And importantly, and with expect the for Complete, institutions, continue working our impact on have And teams publishers, through that the on most transitions. of ecosystem, we on First everyone ourselves, positive schools, those in conversations clients focused are

Hunter Blankenbaker

the this core remarks, Hunter. but driving is think ours. based profitability. to lot I through comment overall of X heard just want you I And -- this thing. a of if really And strategy prepared a our is you just think Alex, is that on about kind focus

may 'XX. profitability was here. opened really, we close net driver instances so main right? So the is there we're but to obviously be really schools FY engaging We that in And with stores, where closed XXX make We transition. XX, some, our stores

have. that's just So all I

Alex Fuhrman

little open the P&L more or of certain way? maybe required a of business X really there had That's should the is, have a a negotiations trying last the doing here it's of X or of keep with to part is I'm guess la months, this the we've a you and helpful. to the to the have intention still basically substantially understand what given fiscal of significant things. businesses be required keep gone X, on of to guys your is those you just kind on out willingness been to now you're through Or update more in have X of some la the the is those your an of la over a guys I side it guess carte the finetuning years comb X, I'm timing last been going trying materials credit in carte instances? understand, as some stores some a that of year since I while from materials carte required a expect material year in we open

Jonathan Shar

some from carte a continue an have basis. No. continue la No. We'll and institutions to

we're profitable, basis really there stores the we us and the merchandise looking of stores on are profitability on that we're those call based helping that general grow driving are that stores. individual and said, referenced in at like growth Hunter initiatives of As are during profitability the an

the material the moving really way model will industry that. the to in a industry carte we education that's model. the and quickly We're the leading the higher But is landscape, entire the la based impact. But support continue across course So on leader model. to where is the stores moving and

have growing, clients interest merchandising there's really businesses profitable every that day focused to in with strong and model. stores are discussions stores we're So that and moving that general even on having

committed So helping of customers highest to we're priority consistently. the and to very to committed we're goals achieve that, our and

student One outcomes. goals is enhancing those of the and experience student

And to on that, we'll so continue progress, that's we're why that making and focused really see incredible accelerate.

Alex Fuhrman

residential just on you're what for most helpful. past really the your ad many we guess month. must dates. That's schools. of moving this mind I some at in you guys enrollment kids won't just are of And know of until dorm And commenting at sure point, this terms But you get imagine later tools your I seeing know Okay. into then partner these drop how do

call starting positive of this So international terms to you're in trends curious to year? see negative or out return for anything if of more enrollment students. And a college

Jonathan Shar

XX Yes, too that But into too early tell had classes early periods But the And really in to need and Alex, and drop down. lot first to more a next as as we'll us this it's more XX at through have it's week point, visibility you that institutions for more to this and at point. that days. locked most get in really number well. to you're second have and their get start visibility still

this little for too a unfortunately, that So point. early at

Alex Fuhrman

No, is Sure. interest of carrying there lot X much year. this assortment a seen the people of quarter on the seen stores, makes that lot have apparel. then business this nonemblematic of on know the general And not something Is merchandise period have to extent summer? that's a a gravitating, traffic generally been side guys selling as your you something obviously at sense. volume you've low been that pretty for for? you an in emblematic as term Is what of well mentioned that more into guess, demand people has of is that and that been I the summer you But I the point, campus. we're

Jonathan Shar

and really stores that, continue rush we're we're see well strength and But But we're that categories focused it's continue in we then excited are, there period. growth. for seeing which really opportunity general on, right merchandise the positioned really, about merchandise we growth general a of merchandise and and some in last for is of think excited to prepared back-to-school well to from this something about the couple we're business. position and now see components that for we've that of have of to for our ready consumers us have Yes, about growth and And for think is the assortment we months. what to consumers over in initiatives really seen and general really good various focus being that, and merchandised demand our really that sort back-to-school operating and

Hunter Blankenbaker

to we're our add that out laid might quarter into I right, just quarter, those not thing it's provided, first only first guidance trends When the Alex, that into we we done. you're is, the And we the well guidance. incorporated

So some commentary profitability, merchandise having good all incorporated around that general and thus growth guidance. into of on far the progress store

moving track we're so And on here.

Operator

call MacDonald from next Mr. Our Needham. Ryan comes with

Ryan MacDonald

far First clarify, versus of Maybe that have schools just is schools on for fiscal churn? today, be to churning. the that to through the incremental -- you I'd choosing the Day what transition seeing curious of are to 'XX are chosen thus Complete mix of terms inclusive of you're expectation transition, in guidance the And just adopt

Jonathan Shar

Yes. guidance the First our the It's Yes, Complete Day 'XX, all question. include plan Jonathan. of for assumptions. fiscal our Ryan, thanks and

our total both assumptions, store for All of and the new store year. opens closes

so the And factors that this we the stores supporting beyond referenced well as program new XXX Day Complete the the of inclusive it in, that are to in First fall. all spring transitioning that

would built that terms of model. what excited really that in in I about So we're of what saw. seeing to is say of And in we're transitions, sort the terms we

in to that, We of record to the certain a others to XXX number And to but plan this and mentioned, our we're we're couldn't get 'XX is of -- and what terms add on as guidance. and stores is did we said, of have in as terms close we profitability, into fiscal that year that referenced, transition. as already were growth Hunter and really stores built and continuing had to focusing stores unprofitable model that get we've fiscal

Ryan MacDonald

I on appreciate the profitability. increased focus

towards to updated the extension next what you of the there? hit, of are flexibility Can as the about sort there updated guess, think sort need give I we progressing you're And then any terms extended milestones talk sort about over credit And does deadline? of As you facility. that XX you this the amended months? and

Jason Snagusky

And Ryan, ABL The this the now covenants loan. I is we nothing answer that we now operations is liquidity extend are that agreement been ample are and out The agreement. stretched We've of before day the the haven't stretched has liquidity XXXX. maturities now The we that signing. X This say monitoring to also amended current Jason. of of through we the out additional out us would additional ABL loan term the is that. provided our been through to December of this managing for everything managing term end that and XXXX. through from undertaken years. previously. and that that just of has I'll until the few this past fund us allow doing undertook, March have both

with support a worked a what of has obvious our So lot did they is that understands showed us, our current business and bank with we bank us group XXXX. who group since was but this

Mike Miller

I I our spring would is you Mike extend and Miller. but flexibility Ryan. would the This platform not rush the new that growth amend critical support us and for most the And as as rush, the fall and seasons. through know, just which, add well, add, just gives just

really and with First really then hold. pivot the see Day success gives and it merchandise really general to runway take Complete us this turnaround continue our the initiatives and So of

constituting As board Board. to strategic is be will so, appointed they to far the the new are short within or as who that that alternatives as you week committee be there a members And know, the Board. will to X and milestones, order next added need in be

that's most imminent that have. So we the milestone

Ryan MacDonald

appreciate Okay. helpful That's I color. that.

about the of sort guess, And call color about Can bit you're the structure profitability moving what little provide I a then, the forward? are On about of just partnership of changing Lids feeling potential I the changes you there? the that comment there. commission noticed the and a Fanatics how during growth partnership, the more and

Hunter Blankenbaker

maybe Jonathan second can the the take and of question Mike, that part part tag of that why you on . don't first

Mike Miller

sure. Yes,

adjustments next mature. were arrangements partnership both strategic mature and share So the as the the the e-commerce the in-store from and year for business continues revenue to rather there continues to

percentages So adjustments after there to made, revenue refer were that XX months. they and the will were

Jonathan Shar

Yes. 'XX, that fiscal merchandise standpoint, from we aided and store aided that was performance the some as and a gross non-emblematic our X%. strong businesses, we're And then increased about really by customer impact for growth emblematic business sales comparable will assortment, said differentiated business other saw, general the experience, almost general but really as product online. trajectory that And in really merchandise we significant excited the the for we in-store and of and product that both unmatched be in there of assortment, beyond. go really and fiscal forward growth I 'XX think

trajectory So is each powerful, of very from national a demands assortment into also to the is really powerful and be exciting the store how from mix. we're local proving and trends, brands and business sort we're excited new reflecting the introducing combination standpoint, that a of really

for with online. and to campus create visitors that driver to a to come stores campus on and and place must-visit really help be destination help and of as us strategic expect an sort and exciting we advantage on really build have to a to their brands be continue so our And a growth continue you're campus on for they

and we it's to the we're leverage partnership. the really it's to very So see continue initiative to for going excited, think us growth, a power strategic and that of

Jason Snagusky

say partners our and done the really Vital wanted through and through that get true partners just Lids to and current various to both helped really And BNED with agreements Fanatics and we're that stores point, them. amend leave extend that with I amendments our process before at we

very and Board, are partnership. support continued for So on and the management we behalf of their the thankful

Operator

to now Investor of turn over Relations, Mr. will call Vice I for the closing Blankenbaker, President remarks. Hunter back

Hunter Blankenbaker

Great. Thanks, going earnings our focus That Thanks, quarter first on rush in look early We're forward our having call September. our and to call everybody. we completes today. fall Maria. to go

Operator

that call. Thank concludes all you today's Ladies for joining. and gentlemen,

may You disconnect. now

Barnes & Noble Education (BNED) 4 Aug 232023 Q4 Earnings call transcript