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 second quarter of fiscal year 2021, which ended on October 31, 2020.

BNED’s fiscal 2021 second quarter results were significantly impacted by the ongoing COVID-19 pandemic, as many schools continued to adjust their learning model and restrict on-campus activities in response to the pandemic. Fewer students returned to campus this fall, as many schools implemented a remote learning model and curtailed on-campus classes and activities. While many big-conferences resumed their sport activities, fan attendance at the games was either eliminated or severely restricted, which further impacted the Company’s high-margin general merchandise business. Additionally, sales were impacted by overall enrollment declines in higher education.

The COVID-19 impact on higher education remains a fluid situation and BNED remains committed to supporting its campus partners through its flexible offerings and ability to quickly pivot to ensure uninterrupted service as institutions manage the safety of their campuses and the Company manages the safety of its campus stores.

Financial highlights for the second quarter 2021:

• Consolidated second quarter sales of $595.5 million decreased 22.9%, as compared to the prior year period; year to date consolidated sales of $799.5 million decreased 26.8%, as compared to the prior year period.
• Consolidated second quarter GAAP net income of $7.5 million, compared to GAAP net income of $35.9 million in the prior year period; year to date GAAP net loss of $39.1 million, compared to GAAP net income of $3.8 million in the prior year period.
• Consolidated second quarter non-GAAP Adjusted Earnings of $11.1 million, compared to non-GAAP Adjusted Earnings of $37.8 million in the prior year period; year to date non-GAAP Adjusted Earnings of $(30.6) million, compared to non-GAAP Adjusted Earnings of $7.8 million in the prior year period.
• Consolidated second quarter non-GAAP Adjusted EBITDA of $24.5 million, compared to non-GAAP Adjusted EBITDA of $74.5 million in the prior year period; year to date non-GAAP Adjusted EBITDA loss of $13.5 million, compared to non-GAAP Adjusted EBITDA $49.4 million in the prior year period.

Operational highlights for the second quarter 2021:

• BNC First Day® year-over-year revenue increased 77%, benefitting from the accelerated move to digital courseware.
• Successfully launched BNC First Day Complete at twelve campuses for the Fall 2020 term. The Company expects to transition additional colleges and universities to the First Day Complete model for Spring 2021.
• Gained over 120,000 gross subscribers for the bartleby® suite of services year to date, with DSS revenue increasing 14%.
• Continued to drive bartleby growth through search engine optimization (SEO) and partnerships with Blackboard and VitalSource, demonstrating a strong channel for growth to supplement fewer in-person selling opportunities caused by the COVID-19 pandemic.
• Continued to attract new clients and generate new business growth, signing over $70 million in net new business to date this fiscal year and expanding BNED’s footprint by 47 BNC institutions and 31 K-12 schools.
• Continued development of the Company’s next generation eCommerce platform; expected phased roll-out throughout calendar year 2021 to grow high-margin general merchandise sales.

“Our teams continued to make tremendous progress in growing and enhancing our offerings and services this quarter, despite the many challenges presented by the ongoing COVID-19 pandemic. As students adjusted to a blended learning environment on campuses nationwide this fall, our flexible offerings ensured that students were equipped with their course materials regardless of whether their schools resumed classes on campus, remotely or adopted a hybrid learning model,” said Michael P. Huseby, Chief Executive Officer and Chairman, BNED. “Our bartleby direct-to-student offerings became increasingly relevant in this environment, providing students with the academic support they need. We continue to scale our bartleby solutions through our existing channels, such as in-store sales and SEO, in addition to leveraging new channels, such as our recently announced Blackboard Assist partnership, to ensure we are providing widespread access to digital learning support at a time when students need it most.”

“As anticipated, we experienced lower physical textbook revenues, as well as a substantial year over year decline in our higher margin general merchandise business this quarter due to the pandemic. In addition to fewer students on campus, our general merchandise business was impacted by the cancellation of many athletic and in-store social events,” continued Mr. Huseby. “We expect the impacts of COVID-19 to extend into the new year, and as such, we are continuing to manage expenses and liquidity prudently. Our current liquidity position remains strong despite the challenging climate. As students, faculty and institutions continue to adapt to an educational landscape that is changing each day, we remain well-positioned to provide invaluable services and support to ensure all of our customers have the tools they need for success.”

Second Quarter 2021 and Year to Date Results

Results for the 13 and 26 weeks of fiscal 2021 and fiscal 2020 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 in the second quarter decreased by $165.2 million, or 22.3%, as compared to the prior year period. Comparable store sales in the Retail segment decreased 28.1% for the quarter, inclusive of a 52% general merchandise comparable sales decline, primarily due to fewer students on campus, curtailed campus activities and significant restrictions on attendance at sporting events.

Retail non-GAAP Adjusted EBITDA for the quarter decreased by $44.2 million to $18.3 million, as compared to non-GAAP Adjusted EBITDA of $62.6 million in the prior year period. The decrease is primarily due to lower textbook sales and lower sales of higher-margin general merchandise products, partially offset by lower selling and administrative expenses.

Wholesale Segment Results

Wholesale sales of $36.4 million for the quarter decreased by $3.8 million, or 9.5%, as compared to $40.2 million in the prior year period. The decrease is primarily due to decreased gross sales, partially offset by lower returns and allowances, both impacted by the COVID-19 pandemic.

Wholesale non-GAAP Adjusted EBITDA for the quarter was $6.6 million, as compared to non-GAAP Adjusted EBITDA of $7.9 million in the prior year period. This decrease was primarily driven by lower sales and lower gross margins, partially offset by lower selling and administrative expenses.

DSS Segment Results

DSS sales of $5.9 million for the quarter increased by $0.7 million, or 14.0%, as compared to $5.2 million in the prior year period. The increase is primarily due to an increase in sales of bartleby subscriptions.

DSS non-GAAP Adjusted EBITDA was $0.7 million for the quarter, as compared to non-GAAP Adjusted EBITDA of $0.3 million in the prior year period, benefitting from the increase in bartleby subscriptions.

Other

Expenses for Corporate Services, which includes unallocated shared-service costs, such as various corporate level expenses and other governance functions, were $5.5 million for the quarter as compared to $5.7 million in the prior period.

Intercompany gross margin eliminations of $4.4 million reflected in non-GAAP Adjusted EBITDA, compared to $9.3 million in the prior year period, are lower due to a decrease in inter-segment sales from Wholesale to Retail.

Additional Events

Pursuant to BNED’s cooperation agreement with Outerbridge, the Company nominated, and stockholders approved Zachary Levenick as an independent director at the Company’s 2020 Annual Meeting that was held on October 22, 2020.

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.