BASKING RIDGE, N.J.--(BUSINESS WIRE)--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 2020. The fourth quarter and full year ended May 2, 2020, consisted of 14 weeks and 53 weeks, respectively, as compared to 13 weeks and 52 weeks in the prior year. Comparable sales data in this release exclude the impact of the additional week in fiscal year 2020.

The COVID-19 pandemic had a significant negative impact on the Company’s results for the fourth quarter and full year of fiscal year 2020. Beginning in early March 2020, BNED’s sales and profitability began to decline rapidly as the Company began to close its stores for the safety of its employees, customers and the communities it serves. The Company also took immediate expense reduction actions to mitigate the impact of closed stores and to preserve liquidity. While its campus stores were closed, the Company continued to serve institutions and students through its campus websites. Additional information regarding the Company’s actions in response to COVID-19 can be found in the COVID-19 section below, as well as the Company’s 10-K filing for fiscal year 2020.

Financial results for the fourth quarter and fiscal year 2020:

• Consolidated fourth quarter sales of $256.9 million decreased 23.2% as compared to the prior year period; fiscal year 2020 consolidated sales of $1,851.1 million decreased 9.0% as compared to the prior year.
• Consolidated fourth quarter GAAP net loss was $(40.3) million, compared to a net loss of $(46.2) million in the prior year period. Consolidated fiscal year 2020 GAAP net loss was $(38.3) million, compared to a net loss of $(24.4) million in the prior year.
• Consolidated fourth quarter non-GAAP Adjusted EBITDA loss was $(20.7) million, compared to non-GAAP Adjusted EBITDA of $19.7 million in the prior year; fiscal year 2020 consolidated non-GAAP Adjusted EBITDA was $42.2 million, compared to non-GAAP Adjusted EBITDA of $104.9 million in the prior year.
• Consolidated fourth quarter non-GAAP Adjusted Earnings was $(28.1) million, compared to non-GAAP Adjusted Earnings of $0.5 million in the prior year period; fiscal year 2020 consolidated non-GAAP Adjusted Earnings was $(21.1) million, compared to non-GAAP Adjusted Earnings of $25.4 million in the prior year.

Operational highlights for the fiscal year 2020:

• Progressed on the execution of a number of strategic initiatives; all of which remained on target prior to the onset of the COVID-19 pandemic, which has accelerated the demand and need to scale such key initiatives.
• Continued to drive subscriptions for the Company’s bartleby®suite of solutions, gaining more than 170,000 subscribers in fiscal year 2020, representing over 200% growth over fiscal year 2019 new subscribers.
• Achieved a six-fold increase in fiscal year 2020 bartleby revenue versus prior year; bartleby peak Spring traffic increased over 10x year-over-year and almost 3x versus peak Fall traffic.
• Completed initial build of the Company’s next generation eCommerce platform; recently executed selective launch with expected further roll-out throughout fiscal year 2021 to grow increased high-margin general merchandise sales.
• Continued to grow the BNC First Day® inclusive access programs, with revenue increasing 91% year-over-year.
• Increased adoption of BNC First Day Complete, with eleven campus partners utilizing the complete access model in the upcoming Fall Term 2020, increasing from four in fiscal year 2020.
• Continued to win new business for both physical and virtual bookstores, including the University of Nevada, Reno, Western Kentucky University, Front Range Community College and The City Colleges of Chicago.
• Provided valuable solutions to schools to help mitigate the COVID-19 on-campus learning disruption utilizing BNED’s virtual store offerings and course material fulfillment capabilities, its BNC First Day offering, and its digital bartleby offerings to help students continue to perform while studying remotely.

“As we entered the fourth quarter of fiscal year 2020, we had achieved significant positive progress and market momentum on each of our key strategic initiatives: winning new business to increase our scale; First Day and First Day Complete inclusive access courseware models; the imminent release of our new eCommerce platform to grow general merchandise sales; and the increased awareness and growth of bartleby, our digital self-study platform. Beginning in the middle of the fourth quarter, COVID-19 blindsided our nation and brought with it profound and unprecedented challenges for our higher education partners. Campuses were forced to close, and students and faculty transitioned to online learning mid-semester to complete their coursework. In light of these extraordinary challenges, we adapted our assets and offerings rapidly to respond,” said Michael P. Huseby, CEO and Chairman, BNED. “BNED was able to pivot quickly as a result of the unique strengths of our different businesses, which are all working together to ensure that our customers receive seamless, uninterrupted service as we fight the challenges this pandemic has presented.”

“The strategic decisions and related investments we have made in our general merchandise business, eCommerce platform, virtual fulfillment capabilities and digital solutions, have allowed us to offer customized and increasingly valuable solutions during a period of significant disruption to the traditional learning model,” continued Mr. Huseby. “Our innovative and new solutions to serve schools and students, coupled with our significantly reduced and more flexible cost structure, provide us with the competitive platform necessary to adapt and lead the profound and accelerated change accompanying COVID-19, and to manage our liquidity to weather this crisis of uncertainty. I am extremely proud of both our people and the institutions we serve, who are working together more closely than ever to continue to deliver the highest possible education experience to our students.”

Fourth Quarter and Fiscal Year Results for 2020

Results for the 14 weeks and 53 weeks of fiscal year 2020 and the 13 weeks and 52 weeks of fiscal year 2019 are as follows:

The Company has three reportable segments: Retail, Wholesale and Digital Student Solutions (DSS). 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

Retail sales were $238.5 million for the quarter, declining $81.4 million, or 25.4%, as compared to the prior year period, with comparable store sales decreasing 34.7%. Retail non-GAAP Adjusted EBITDA was $(13.0) million for the quarter, compared to $29.1 million in the prior year period. The decrease in sales and non-GAAP Adjusted EBITDA are primarily attributable to the COVID-19 related store closures that occurred beginning in March. Although the Spring rush sales period had already passed, the Company’s high-margin general merchandise business was significantly impacted by campus store closures and cancelled events, including NCAA sports tournaments and graduation season.

Fiscal year 2020 retail sales were $1,712.9 million, declining $176.1 million, or 9.3%, as compared to the prior year period, with comparable store sales decreasing 9.9%. Retail non-GAAP Adjusted EBITDA was $36.2 million for fiscal year 2020, compared to $89.1 million in the prior year period. The sales and non-GAAP Adjusted EBITDA decline are due to lower textbook sales trends that began earlier in the year, coupled with the impact of lower high-margin general merchandise sales during the fourth quarter, somewhat mitigated by the company cost reduction actions discussed in further detail below.

Wholesale Segment Results

Wholesale fourth quarter sales of $18.8 million increased $4.7 million, or 33.7%, as compared to the prior year period. Wholesale sales for fiscal year 2020 of $198.4 million decreased $25.0 million, or 11.2%, as compared to the prior year period, primarily due to lower textbook sales in the retail segment.

Wholesale non-GAAP Adjusted EBITDA for the quarter was $(6.5) million, compared to $(5.3) million in the prior year period. Wholesale non-GAAP Adjusted EBITDA for fiscal year 2020 was $21.6 million, compared to $35.0 million in the prior year period, primarily due to lower sales.

DSS Segment Results

DSS fourth quarter sales of $6.6 million increased $1.1 million, or 20.9%, as compared to the prior year period. DSS fiscal year 2020 sales of $23.7 million increased $2.3 million, or 10.9%, as compared to the prior year period.

DSS non-GAAP Adjusted EBITDA was $0.9 million for the quarter, compared to $0.5 million in the prior year period. DSS non-GAAP Adjusted EBITDA was $3.4 million for fiscal year 2020, compared to $6.2 million in the prior year period. The non-GAAP Adjusted EBITDA decrease was primarily due to increased selling and administrative costs related to continued investments in the Company’s bartleby digital product offerings.

Other

Selling and administrative expenses for Corporate Services, which includes unallocated shared-service costs, such as various corporate level expenses and other governance functions, were $3.6 million for the quarter, compared to $7.2 million in the prior period. Selling and administrative expenses for Corporate Services for fiscal year 2020 were $19.4 million, compared to $24.9 million in the prior year period.

Intercompany gross margin eliminations of $1.4 million for the quarter were reflected in non-GAAP Adjusted EBITDA, compared to $2.5 million in the prior year period. Intercompany gross margin eliminations of $0.4 million for fiscal year 2020 were reflected in non-GAAP Adjusted EBITDA, compared to $(0.5) million in the prior year period.

COVID-19 Impact and Update

To mitigate the impact of the COVID-19 related campus store closures, the Company took a number of actions throughout the fourth quarter to reduce expenses and preserve liquidity, including furloughing the majority of its Retail workforce, reducing expenses and capital expenditures, eliminating the 401-K match through the calendar year, and deferring all non-essential spending. As a result, management currently believes that the Company’s financial resources, including ongoing access to its credit facility, provide sufficient liquidity to alleviate any near-term need to obtain additional financing to support its business operations.

To prepare for the safe reopening of its campus stores, BNED has developed a comprehensive reentry program that incorporates social distancing guidelines from the CDC and the WHO to best promote the safety and well-being of staff and customers at each of its campus store locations. This includes frequent sanitizing of high-touch surfaces, implementing social distancing measures, including reduced occupancy, and incorporating other preventive measures, such as sneeze guards, contactless payment, and curbside pickup areas. BNED is reopening its campus stores based on national, state and local guidelines, in partnership with school administrations and the protocols they implement.

Most importantly, as different schools consider the alternatives between on-campus classes, remote learning or the implementation of a hybrid model, BNED is well prepared to provide valuable solutions and service their students through its campus bookstores, virtual bookstores, individual school websites and digital offerings to ensure students are well equipped to continue their learning journey, whichever course it may take.

Strategic Review Update

The Board of Directors, with the assistance of its financial and legal advisors, continues with its previously announced review of strategic opportunities. As previously disclosed, the Board’s review is designed to accelerate the execution of customer-focused strategic initiatives and enhance value for BNED shareholders, including, but not limited to, continued execution of the Company’s current business plan, new partnerships, joint ventures and other potential opportunities. There can be no assurance that the review will result in a transaction or announcement of any kind. The Company has not set a timetable for the conclusion of the review and does not intend to comment further unless and until the Board has approved a specific course of action or otherwise determined that further disclosure is appropriate or required by law.

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, a digital direct-to-student learning ecosystem, 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.