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(“Fanatics”) and Fanatics Lids College, Inc.
−Removed: (“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships.
−Removed: We expect gross general merchandise sales to continue to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the FLC Partnership.
−Removed: Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our logo and emblematic general merchandise business.
+Added: D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships.
+Added: We expect gross general merchandise sales to continue to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the F/L Partnership.
+Added: Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our logo general merchandise business.
The Barnes & Noble brand (licensed from our former parent) along with our subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States.
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Business in our Annual Report on Form 10-K for the fiscal year ended April 30, 2022.
+Added: Financing Arrangements
+Added: On March 8, 2023, subsequent to quarter end, we amended our existing Credit Agreement to, among other things, extend the maturity date thereunder by six months to August 29, 2024.
+Added: The amendment also reduces the commitments under the Credit Agreement by $20 million to $380 million.
+Added: On March 8, 2023, subsequent to quarter end, we amended the Term Loan Credit Agreement to, among other things, extend the maturity date thereunder by six months to December 7, 2024.
+Added: For additional information, see Item 1.
+Added: Financial Statements - Note 14.
+Added: Subsequent Event.
Cost Savings Initiative
On December 2, 2022, the Board of Directors approved a company-wide initiative to drive efficiencies, streamline operations, simplify the organizational structure and further reduce non-essential costs.
−Removed: These actions are expected to be substantially implemented within thirty days.
−Removed: The Company expects to incur restructuring charges, primarily related to severance, of approximately $5 million to $6 million in the third quarter of fiscal 2023 and expects to save $10 million to $15 million in fiscal year 2023.
−Removed: These initiatives are expected to provide annualized savings of $30 million to $35 million once fully implemented.
+Added: These actions were substantially implemented in December 2022.
+Added: The Company incurred restructuring charges, primarily related to severance, of approximately $6 million in the third quarter of fiscal 2023 and, as a result, expects to save $10 million to $15 million in fiscal year 2023.
+Added: These initiatives are expected to provide annualized savings of $30 million to $35 million.
The restructuring charges are excluded from non-GAAP adjusted EBITDA and from the annualized and fiscal year 2023 savings.
+Added: We continue to focus on achieving efficiencies and reducing costs to further improve our operating performance.
First Day Inclusive and Equitable Access Programs
−Removed: We provide product and service offerings designed to address the most pressing issues in higher education, including equitable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes.
+Added: We provide product and service offerings designed to address the most pressing issues in higher education, including equitable access, enhanced convenience and improved affordability through innovative course material delivery models
+Added: designed to drive improved student experiences and outcomes.
We offer our BNC First Day ® inclusive and equitable access programs, consisting of First Day Complete and First Day , in which course materials, including both physical and digital content, are offered at a reduced price through a course fee or included in tuition, and delivered to students on or before the first day of class.
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We plan to move many institutions to First Day Complete for the Fall of 2023 and the majority of schools by Fall 2024.
−Removed: Approximately 111 campus stores adopted our First Day Complete course materials delivery program for the 2022 Fall Term, representing approximately 545,000 (as reported by National Center for Education Statistics) in total undergraduate student enrollment, a growth rate of 85% over Fall 2021.
−Removed: During the 13 weeks ended October 29, 2022, First Day Complete sales increased by $44.3 million to $89.9 million, or 97%, as compared to $45.6 million in the prior year period.
−Removed: During the 26 weeks ended October 29, 2022, First Day Complete sales increased by $54.7 million to $106.3 million, or 106%, as compared to $51.6 million in the prior year period.
−Removed: Partnership with Fanatics and FLC
−Removed: In December 2020, we entered into the FLC Partnership.
+Added: As of January 28, 2023, 116 campus stores adopted our First Day Complete course materials delivery program for the 2023 Spring Term, representing approximately 580,000 in total undergraduate student enrollment (as reported by National Center for Education Statistics), compared to 76 campus stores representing approximately 380,000 in total undergraduate student enrollment or the 2022 Spring Term.
+Added: During the 13 weeks ended January 28, 2023, First Day Complete sales increased by $28.9 million to $66.9 million, or 76%, as compared to $38.0 million in the prior year period.
+Added: During the 39 weeks ended January 28, 2023, First Day Complete sales increased by $83.8 million to $173.4 million, or 94%, as compared to $89.6 million in the prior year period.
+Added: Partnership with Fanatics and Lids
+Added: In December 2020, we entered into the F/L Partnership.
Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our general merchandise business.
Fanatics’ cutting-edge e-commerce and technology expertise offers our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform.
−Removed: Coupled with Lids (FLC's parent company), the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.
+Added: Coupled with Lids, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.
We maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores.
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We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites.
−Removed: FLC manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores, and FLC owns the inventory it manages, relieving us of the obligation to finance inventory purchases from working capital.
+Added: Lids manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores, and Lids owns the inventory it manages, relieving us of the obligation to finance inventory purchases from working capital.
COVID-19 Business Impact
Our business has been significantly negatively impacted by the COVID-19 pandemic, as many schools adjusted their learning models and on-campus activities.
−Removed: Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve.
However, on campus traffic continues to grow from increased campus events and activities, as compared to the last two years.
−Removed: We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including variants, on enrollments, campus activities, university budgets, athletics and other areas that directly affect our business operations .
+Added: Our third quarter 2022 results were negatively impacted by a Covid variant experienced on campuses across the country during the 2022 Spring Term which did not recur during the 2023 Spring Term.
+Added: While the impact of the COVID-19 pandemic is lessening, we cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including variants, on enrollments, campus activities, university budgets, athletics and other areas that directly affect our business operations .
Although most four year schools returned to a traditional on-campus environment, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings.
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Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”.
−Removed: We identify our segments in accordance with the way our business is managed (focusing on the financial information distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance.
+Added: We identify our segments in accordance with the way our business is managed (focusing on the financial information
+Added: distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance.
The following summarizes the three segments.
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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.
−Removed: The Retail Segment also offers inclusive and equitable access programs, in which
−Removed: 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.
+Added: The Retail Segment also offers inclusive and equitable 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.
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Many colleges and K-12 schools had been required to cease in-person classes in an attempt to limit the spread of the COVID-19 virus and ensure the safety of their students.
−Removed: Although many academic institutions have since reopened, some are providing alternatives to traditional in-person instruction, including online and hybrid learning options and significantly reduced classroom sizes.
−Removed: While many athletic conferences resumed their sport activities, other events, such as parent and alumni weekends and prospective student campus tour activities, some may still be curtailed.
+Added: Although most academic institutions have since reopened, some are providing alternatives to traditional in-person instruction, including online and hybrid learning options and significantly reduced classroom sizes.
+Added: While many athletic conferences resumed their sport
+Added: activities, other events, such as parent and alumni weekends and prospective student campus tour activities, some may still be curtailed or offered virtually.
Additionally, our business, like many others has been affected by the challenging labor market and the ability to recruit employees.
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We may require additional capital in the future to sustain or grow our business.
−Removed: The future availability of financing will depend on a variety of factors, such as economic and market conditions, and the
−Removed: availability of credit.
+Added: The future availability of financing will depend on a variety of factors, such as economic and market conditions, and the availability of credit.
These factors could materially adversely affect our costs of borrowing, and our financial position and results of operations would be adversely impacted.
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Since the demand for used textbooks has historically been greater than the available supply, our financial results are highly dependent upon Wholesale’s ability to build its textbook inventory from suppliers in advance of the selling season.
−Removed: Recently, the impact of fewer students on campus due to COVID-19 has significantly impacted our on-campus buyback programs which supplies Wholesale’s used textbook inventory for future selling periods.
+Added: Recently, the impact of fewer students on campus due to the COVID-19 pandemic has significantly impacted our on-campus buyback programs which supplies Wholesale’s used textbook inventory for future selling periods.
Some textbook publishers have begun to supply textbooks pursuant to consignment or rental programs which could impact used textbook supplies in the future.
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Students purchase textbooks and other course materials from multiple providers, are highly price sensitive, and can easily shift spending from one provider or format to another.
+Added: • First Day Complete and First Day Models.
+Added: Offering courseware sales through our inclusive and equitable access First Day Complete and First Day models is a key, and increasingly important, strategic initiative of ours to meet the market demands of substantially reduced pricing to students.
+Added: Our First Day Complete and First Day programs contribute to improved student outcomes, while increasing our market share, revenue and relative gross profits of courseware sales given the higher volumes of units sold in such models as compared to historical sales models that rely on individual student marketing and sales.
+Added: We expect these programs to allow us to ultimately reverse historical long-term trends in courseware revenue declines, which has been observed at those schools where such programs have been adopted.
+Added: We are moving quickly and decisively to accelerate our First Day Complete strategy.
+Added: While we plan to move many institutions to First Day Complete for the Fall of 2023, and the majority of our schools by Fall 2024, we cannot guarantee that we will be able to achieve these plans within these timeframes or at all.
• A Large Number of Traditional Campus Bookstores Have Yet to be Outsourced.
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We expect awards of new accounts resulting in new physical and virtual store openings will continue to be an important driver of future growth in our business.
−Removed: Offering courseware sales through our inclusive and equitable access First Day Complete and First Day models is a key, and increasingly important, strategic initiative of ours to meet the market demands of substantially reduced pricing to students.
−Removed: Our First Day Complete and First Day programs contribute to improved student outcomes, while increasing our market share, revenue and relative gross profits of courseware sales given the higher volumes of units sold in such models as compared to historical sales models that rely on individual student marketing and sales.
−Removed: We expect these programs to
−Removed: allow us to ultimately reverse historical long-term trends in courseware revenue declines, which has been observed at those schools where such programs have been adopted.
−Removed: We are moving quickly and decisively to accelerate our First Day Complete strategy.
−Removed: While we plan to move many institutions to First Day Complete for the Fall of 2023, and the majority of our schools by Fall 2024, we cannot guarantee that we will be able to achieve these plans within these timeframes or at all.
We also expect that certain less profitable or non-essential bookstores we operate may close.
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13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29,
−Removed: 2022 October 30,
−Removed: 2021 October 29,
−Removed: 2022 October 30,
+Added: Dollars in thousands January 28,
+Added: 2023 January 29,
+Added: 2022 January 28,
+Added: 2023 January 29,
Product sales and other (a)
2 unchanged sentences
Total sales $ 447,064 $ 402,798 $ 1,328,020 $ 1,270,569
−Removed: Net income (loss) $ 22,144 $ 22,528 $ (30,563) $ (21,100)
+Added: Net loss $ (25,049) $ (36,801) $ (55,612) $ (57,901)
Adjusted Earnings (non-GAAP) (b)
7 unchanged sentences
Total Adjusted EBITDA (non-GAAP) $ 6,423 $ (13,101) $ 12,369 $ 1,370
−Removed: (a) Effective in April 2021, as contemplated by the FLC Partnership's merchandising agreement and e-commerce agreement, we began to transition the fulfillment of logo and emblematic general merchandise sales to FLC and Fanatics.
−Removed: The transition to FLC for campus
−Removed: stores was effective in April 2021, and the e-commerce websites transitioned to Fanatics throughout Fiscal 2022.
−Removed: As the logo and emblematic general merchandise sales are fulfilled by FLC 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 and emblematic sales on a gross basis in the periods prior to the transition.
+Added: (a) 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 logo general merchandise sales to Lids and Fanatics.
+Added: The transition to Lids for campus stores was effective in April 2021, and the e-commerce websites transitioned to Fanatics throughout Fiscal 2022.
+Added: 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.
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13 weeks ended 39 weeks ended
−Removed: 2022 October 30,
−Removed: 2021 October 29,
−Removed: 2022 October 30,
+Added: 2023 January 29,
+Added: 2022 January 28,
+Added: 2023 January 29,
Product sales and other 90.1 % 93.8 % 92.7 % 93.1 %
10 unchanged sentences
Depreciation and amortization expense 2.4 3.0 2.6 2.9
+Added: Impairment loss (non-cash) 1.3 1.6 0.5 0.5
Restructuring and other charges 1.3 — 0.5 0.2
−Removed: Operating income (loss) 4.4 % 3.9 % (2.4) % (1.8) %
+Added: Operating loss (4.0) % (8.2) % (3.1) % (3.9) %
(a) Represents the percentage these costs bear to the related sales, instead of total sales.
−Removed: Results of Operations - 13 and 26 weeks ended October 29, 2022 compared with the 13 and 26 weeks ended October 30, 2021
−Removed: 13 weeks ended October 29, 2022
+Added: Results of Operations - 13 and 39 weeks ended January 28, 2023 compared with the 13 and 39 weeks ended January 29, 2022
+Added: 13 weeks ended January 28, 2023
Dollars in thousands Retail Wholesale DSS Corporate Services Eliminations Total
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Depreciation and amortization expense 8,749 1,357 506 6 — 10,618
+Added: Impairment loss (non-cash) 6,008 — — — — 6,008
Restructuring and other charges 1,452 931 1,848 1,744 — 5,975
−Removed: Operating income (loss) $ 30,547 $ 218 $ (1,941) $ (5,352) $ 3,258 $ 26,730
−Removed: 13 weeks ended October 30, 2021
+Added: Operating (loss) income $ (10,036) $ 817 $ (2,787) $ (7,322) $ 1,464 $ (17,864)
+Added: 13 weeks ended January 29, 2022
Dollars in thousands Retail Wholesale DSS Corporate Services Eliminations Total
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Depreciation and amortization expense 8,939 1,396 1,826 18 — 12,179
+Added: Impairment loss (non-cash) 6,411 — — — — 6,411
Restructuring and other charges 30 — — 16 — 46
−Removed: Operating income (loss) $ 29,595 $ (131) $ (2,301) $ (6,867) $ 4,293 $ 24,589
−Removed: 26 weeks ended October 29, 2022
+Added: Operating (loss) income $ (30,845) $ 2,767 $ (1,669) $ (5,188) $ 1,800 $ (33,135)
+Added: 39 weeks ended January 28, 2023
Dollars in thousands Retail Wholesale DSS Corporate Services Eliminations Total
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Depreciation and amortization expense 27,147 4,076 2,646 41 — 33,910
+Added: Impairment loss (non-cash) 6,008 — — — — 6,008
Restructuring and other charges 1,452 931 1,848 2,379 — 6,610
Operating (loss) income $ (14,029) $ 2,454 $ (7,027) $ (20,281) $ (157) $ (39,040)
−Removed: 26 weeks ended October 30, 2021
+Added: 39 weeks ended January 29, 2022
Dollars in thousands Retail Wholesale DSS Corporate Services Eliminations Total
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Depreciation and amortization expense 27,015 4,060 5,627 53 — 36,755
+Added: Impairment loss (non-cash) 6,411 — — — — 6,411
Restructuring and other charges 2,113 — — 954 — 3,067
Operating (loss) income $ (31,887) $ 7,750 $ (5,286) $ (20,414) $ 556 $ (49,281)
−Removed: The following table summarizes our sales for the 13 and 26 weeks ended October 29, 2022 and October 30, 2021:
+Added: The following table summarizes our sales for the 13 and 39 weeks ended January 28, 2023 and January 29, 2022:
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021 Var $ Var % October 29, 2022 October 30, 2021 Var $ Var %
+Added: Dollars in thousands January 28, 2023 January 29, 2022 Var $ Var % January 28, 2023 January 29, 2022 Var $ Var %
Product sales and other $ 402,755 $ 377,713 $ 25,042 6.6% $ 1,231,465 $ 1,182,812 $ 48,653 4.1%
1 unchanged sentence
Total Sales $ 447,064 $ 402,798 $ 44,266 11.0% $ 1,328,020 $ 1,270,569 $ 57,451 4.5%
−Removed: The sales decrease during the 13 weeks ended October 29, 2022 is primarily related to lower course material sales primarily due to the shift to more digital course materials, partially offset by higher general merchandise sales as many schools approach a more traditional on campus learning experience.
−Removed: The sales increase during the 26 weeks ended October 29, 2022 is primarily related to higher general merchandise sales as many schools approach a more traditional on campus learning experience, partially offset by lower course material sales primarily due to the shift to more digital course materials.
+Added: The sales increase during the 13 and 39 weeks ended January 28, 2023 is primarily related to higher course material sales, primarily at our First Day programs and higher general merchandise sales as many schools approach a more traditional on campus learning experience.
The components of the variances for the 13 and 39 week periods are reflected in the table below.
Sales variances 13 weeks ended 39 weeks ended
−Removed: Dollars in millions October 29, 2022 October 29, 2022
+Added: Dollars in millions January 28, 2023 January 28, 2023
New stores $ 21.6 $ 73.5
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Eliminations (d)
+Added: $ (3.7) $ 0.6
Total sales variance:
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(“Fanatics”) and Fanatics Lids College, Inc.
−Removed: (“FLC”) (collectively referred to herein as the “FLC Partnership”).
−Removed: Effective in April 2021, as contemplated by the FLC Partnership's merchandising agreement and e-commerce agreement, we began to transition the fulfillment of logo and emblematic general merchandise sales to FLC and Fanatics.
−Removed: The transition to FLC for campus stores was effective in April 2021, and the e-commerce websites transitioned to Fanatics throughout Fiscal 2022.
−Removed: As the logo and emblematic general merchandise sales are fulfilled by FLC 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 and emblematic sales on a gross basis in the periods prior to the transition .
+Added: D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L Partnership”).
+Added: 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 logo general merchandise sales to Lids and Fanatics.
+Added: The transition to Lids for campus stores was effective in April 2021, and the e-commerce websites transitioned to Fanatics throughout Fiscal 2022.
+Added: 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.
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13 weeks ended 39 weeks ended
−Removed: October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
+Added: January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
Number of Stores:
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Generally, sales are impacted by revenue from net new/closed stores, increased campus traffic, and an increase in the number of on campus activities and events, such as graduations, alumni events and prospective student campus tours, as schools approach a more traditional campus experience.
−Removed: We continued to experience higher general merchandise sales, especially for graduation products, logo and emblematic products, and cafe and convenience products, as on campus traffic continues to grow compared to the prior year.
−Removed: Sales were also negatively impacted by lower enrollments, primarily at community colleges and by international students, and the continuation of remote and hybrid class offerings.
−Removed: Retail sales decreased by $10.3 million, or 1.7%, to $598.6 million during the 13 weeks ended October 29, 2022 from $608.9 million during the 13 weeks ended October 30, 2021.
−Removed: • Product sales and other decreased by $2.0 million, or 0.4%, to $557.3 million during the 13 weeks ended October 29, 2022 from $559.3 million during the 13 weeks ended October 30, 2021.
−Removed: During the 13 weeks ended October 29, 2022, total course material product sales decreased by $13.9 million, or 3.2%, to $419.9 million;
−Removed: and service and other revenue decreased by $4.6 million, or 23.9%, to $14.7 million primarily due to lower shipping and handling income resulting from increased in-store order fulfillment;
−Removed: partially offset by an increase in total general merchandise product sales of $16.4 million, or 15.5%, to $122.7 million as students return to on campus activities.
−Removed: • Course material product sales decreased primarily due to the shift to more digital course materials.
−Removed: Additionally, the First Day programs increased rental textbook activity, increasing deferred revenue for the Fall term into the third quarter.
−Removed: Revenue from both of our First Day models offset this decline with increased total revenue of $47.2 million to $143.2 million, or 49%, during the 13 weeks ended October 29, 2022, as compared to $96.0 million during the 13 weeks ended October 30, 2021.
−Removed: Specifically, First Day Complete total sales increased by $44.3 million to $89.9 million, or 97%, during the 13 weeks ended October 29, 2022, as compared to $45.6 million during the 13 weeks ended October 30, 2021.
−Removed: Approximately 111 campus stores adopted our First Day Complete course materials delivery program for the 2022 Fall Term, representing approximately 545,000 (as reported by National Center for Education Statistics) in total undergraduate student enrollment, a growth rate of 85% over Fall 2021.
−Removed: • Total course material rental income decreased by $8.3 million, or 16.7%, to $41.3 million during the 13 weeks ended October 29, 2022 from $49.6 million during the 13 weeks ended October 30, 2021 primarily due to the shift to more digital course materials.
−Removed: Retail sales increased by $15.7 million, or 1.9%, to $835.1 million during the 26 weeks ended October 29, 2022 from $819.4 million during the 26 weeks ended October 30, 2021.
−Removed: • Product sales and other increased by $26.1 million, or 3.5%, to $782.9 million during the 26 weeks ended October 29, 2022 from $756.7 million during the 26 weeks ended October 30, 2021.
−Removed: During the 26 weeks ended October 29, 2022, total general merchandise product sales increased by $39.8 million, or 23.2%, to $211.5 million as students return to on campus activities;
−Removed: offset by a decrease in total course material product sales of $8.5 million, or 1.5%, to $547.5 million;
−Removed: and a decrease in service and other revenue of $5.2 million, or 18.0%, to $23.9 million, primarily due to lower shipping and handling income resulting from increased in-store order fulfillment.
−Removed: • Course material product sales decreased primarily due to the shift to more digital course materials.
−Removed: Additionally, the First Day programs increased rental textbook activity, increasing deferred revenue for the Fall term into the third quarter.
−Removed: Revenue from both of our First Day models offset this decline with increased total revenue of $65.2 million to $188.2 million, or 53%, during the 26 weeks ended October 29, 2022, as compared to $123.0 million during the 26 weeks ended October 30, 2021.
−Removed: Specifically, First Day Complete total sales increased by $54.7 million to $106.3 million, or 106%, during the 26 weeks ended October 29, 2022, as compared to $51.6 million during the 26 weeks ended October 30, 2021.
−Removed: Approximately 111 campus stores adopted our First Day Complete course materials delivery program for the 2022 Fall Term, representing approximately 545,000 (as reported by National Center for Education Statistics) in total undergraduate student enrollment, a growth rate of 85% over Fall 2021.
−Removed: • Total course material rental income decreased by $10.4 million, or 16.6%, to $52.2 million during the 26 weeks ended October 29, 2022 from $62.7 million during the 26 weeks ended October 30, 2021 primarily due to the shift to more digital course materials.
+Added: We continued to experience higher sales related to our First Day programs and higher general merchandise sales, especially for graduation products, logo products, and cafe and convenience products, as on campus traffic continues to grow compared to the prior year.
+Added: Sales were negatively impacted by lower enrollments, primarily at community colleges and by international students, and the continuation of remote and hybrid class offerings.
+Added: Retail sales increased by $46.5 million, or 12.4%, to $421.2 million during the 13 weeks ended January 28, 2023 from $374.7 million during the 13 weeks ended January 29, 2022.
+Added: Our third quarter 2022 results were negatively impacted by a Covid variant experienced on campuses across the country during the 2022 Spring Term which did not recur during the 2023 Spring Term.
+Added: In addition, our sales and margins were positively impacted in Q3 2023 compared to Q3 2022 as a result of improved availability of used inventory which was constrained in 2022.
+Added: • Product sales and other increased by $27.3 million, or 7.8%, to $377.0 million during the 13 weeks ended January 28, 2023 from $349.7 million during the 13 weeks ended January 29, 2022.
+Added: During the 13 weeks ended January 28, 2023,
+Added: total course material product sales increased by $23.8 million, or 9.1%, to $286.7 million;
+Added: total general merchandise product sales increased by $5.0 million, or 6.6%, to $81.8 million as students return to on campus activities, partially offset by a decrease in service and other revenue of $1.6 million, or 15.6%, to $8.4 million.
+Added: • Revenue from both of our First Day inclusive and equitable access programs increased by $45 million, or 59%, to $121 million during the 13 weeks ended January 28, 2023, as compared to $76 million during the 13 weeks ended January 29, 2022.
+Added: Specifically, First Day Complete total sales increased by $29 million, or 76%, to $67 million during the 13 weeks ended January 28, 2023, as compared to $38 million during the 13 weeks ended January 29, 2022.
+Added: As of January 28, 2023, 116 campus stores adopted our First Day Complete course materials delivery program for the 2023 Spring Term, representing approximately 580,000 in total undergraduate student enrollment (as reported by National Center for Education Statistics), compared to 76 campus stores representing approximately 380,000 in total undergraduate student enrollment in the 2022 Spring Term.
+Added: • Total course material rental income increased by $19.2 million, or 76.6%, to $44.3 million during the 13 weeks ended January 28, 2023 from $25.1 million during the 13 weeks ended January 29, 2022 primarily due to increased rental textbook activity in our First Day Complete program and improved availability of used textbook inventory.
+Added: Retail sales increased by $62.2 million, or 5.2%, to $1,256.4 million during the 39 weeks ended January 28, 2023 from $1,194.2 million during the 39 weeks ended January 29, 2022.
+Added: • Product sales and other increased by $53.4 million, or 4.8%, to $1,159.8 million during the 39 weeks ended January 28, 2023 from $1,106.4 million during the 39 weeks ended January 29, 2022.
+Added: During the 39 weeks ended January 28, 2023, total course material product sales increased by $15.3 million, or 1.9%, to $834.2 million;
+Added: total general merchandise product sales increased by $44.9 million, or 18.1%, to $293.3 million as students return to on campus activities, partially offset by a decrease in service and other revenue of $6.8 million, or 32.3%, to $32.3 million primarily due to lower shipping and handling income resulting from increased in-store order fulfillment.
+Added: • Revenue from both of our First Day inclusive and equitable access programs increased by $110 million, or 55%, to $309 million during the 39 weeks ended January 28, 2023, as compared to $199 million during the 39 weeks ended January 29, 2022.
+Added: Specifically, First Day Complete total sales increased by $84 million, or 94%, to $174 million during the 39 weeks ended January 28, 2023, as compared to $90 million during the 39 weeks ended January 29, 2022.
+Added: As of January 28, 2023, 116 campus stores adopted our First Day Complete course materials delivery program for the 2023 Spring Term, representing approximately 580,000 in total undergraduate student enrollment (as reported by National Center for Education Statistics), compared to 76 campus stores representing approximately 380,000 in total undergraduate student enrollment in the 2022 Spring Term.
+Added: • Total course material rental income increased by $8.8 million, or 10.0%, to $96.6 million during the 39 weeks ended January 28, 2023 from $87.8 million during the 39 weeks ended January 29, 2022 primarily due to increased rental textbook activity in our First Day Complete program and improved availability of used textbook inventory.
Retail Gross Comparable Store Sales
−Removed: During the 13 and 26 weeks ended October 29, 2022, logo and emblematic sales are reflected in sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic sales on a gross basis for the majority of our e-commerce websites during the 26 weeks ended October 30, 2021.
+Added: During the 13 and 39 weeks ended January 28, 2023, logo general merchandise sales are reflected in sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo general merchandise sales on a gross basis for the majority of our e-commerce websites during the 39 weeks ended January 29, 2022.
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.
−Removed: For Retail Gross Comparable Store Sales, sales for logo and emblematic general merchandise fulfilled by FLC, Fanatics and digital agency sales are included on a gross basis for consistent year-over-year comparison.
−Removed: Effective in April 2021, as contemplated by the FLC Partnership's merchandising agreement and e-commerce agreement, we began to transition the fulfillment of logo and emblematic general merchandise sales to FLC and Fanatics.
−Removed: The transition to FLC for campus stores was effective in April 2021, and the e-commerce websites transitioned to Fanatics throughout Fiscal 2022.
−Removed: As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic sales on a gross basis in the periods prior to the transition.
+Added: 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.
+Added: 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 logo general merchandise sales to Lids and Fanatics.
+Added: The transition to Lids for campus stores was effective in April 2021, and the e-commerce websites transitioned to Fanatics throughout Fiscal 2022.
+Added: 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 condensed 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.
1 unchanged sentence
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.
−Removed: 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.
−Removed: During the 13 and 26 weeks ended October 29, 2022, Retail Gross Comparable Store general merchandise sales increased by 4.5% and 14.9%, respectively.
−Removed: During the 13 and 26 weeks ended October 29, 2022, Retail Gross Comparable Store course material sales decreased by 4.6% and 3.2%, respectively.
−Removed: The decrease in course material sales was primarily due to a shift to lower cost options and more affordable solutions, including digital offerings, offset by the growth of First Day inclusive and equitable access programs, digital and eTextbook revenue increases.
−Removed: Revenue from both of our First Day models offset the course materials declines.
−Removed: Total revenue from our First Day models increased by $47.2 million to $143.2 million, or 49%, during the 13 weeks ended October 29, 2022, as compared to $96.0 million during the 13 weeks ended October 30, 2021.
−Removed: Specifically, First Day Complete total sales increased by $44.3 million to $89.9 million, or 97%, during the 13 weeks ended October 29, 2022, as compared to $45.6 million during the 13 weeks ended October 30, 2021.
−Removed: Total revenue from our First Day models increased by $65.2 million to $188.2 million, or 53%, during the 26 weeks ended October 29, 2022, as compared to $123.0 million during the 26 weeks ended October 30, 2021.
−Removed: Specifically, First Day Complete total sales increased by $54.7 million to $106.3 million, or 106%, during the 26 weeks ended October 29, 2022, as compared to $51.6 million during the 13 weeks ended October 30, 2021.
−Removed: Retail Gross Comparable Store Sales variances by category for the 13 week periods are as follows:
+Added: As a result, our calculation of comparable
+Added: 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.
+Added: During the 13 and 39 weeks ended January 28, 2023, Retail Gross Comparable Store general merchandise sales increased by 2.3% and 11.3%, respectively.
+Added: During the 13 and 39 weeks ended January 28, 2023, Retail Gross Comparable Store course material sales increased by 7.4% and 0.3%, respectively.
+Added: The increase in course material sales was primarily due to the growth of First Day inclusive and equitable access programs (as discussed above), partially offset by a shift to lower cost options and more affordable solutions, including digital offerings.
+Added: Retail Gross Comparable Store Sales variances by category for the 13 and 39 week periods are as follows:
13 weeks ended 39 weeks ended
−Removed: Dollars in millions October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
+Added: Dollars in millions January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
Textbooks (Course Materials) $ 21.3 7.4 % $ (11.9) (4.0) % $ 2.9 0.3 % $ 17.4 2.0 %
1 unchanged sentence
Total Retail Gross Comparable Store Sales $ 23.9 5.9 % $ 30.9 8.4 % $ 45.5 3.6 % $ 186.9 17.6 %
−Removed: Wholesale sales decreased by $0.6 million, or 2.5% to $21.1 million during the 13 weeks ended October 29, 2022 from $21.7 million during the 13 weeks ended October 30, 2021.
−Removed: Wholesale sales decreased by $8.0 million, or 12.0% to $58.2 million during the 26 weeks ended October 29, 2022 from $66.2 million during the 26 weeks ended October 30, 2021.
−Removed: The decrease is primarily due to lower gross sales impacted by supply constraints resulting from the lack of textbook purchasing opportunities during the prior fiscal year, a decrease in customer demand resulting from a shift in buying patterns from physical textbooks to digital products, and lower demand from other third-party clients, partially offset by lower returns and allowances.
−Removed: DSS total sales increased by $0.2 million, or 2.3% to $8.5 million during the 13 weeks ended October 29, 2022 from $8.3 million during the 13 weeks ended October 30, 2021.
−Removed: DSS total sales increased by $1.1 million, or 6.4% to $17.6 million during the 26 weeks ended October 29, 2022 from $16.6 million during the 26 weeks ended October 30, 2021.
+Added: Wholesale sales increased by $1.9 million, or 5.2% to $38.9 million during the 13 weeks ended January 28, 2023 from $37.0 million during the 13 weeks ended January 29, 2022.
+Added: The increase is primarily due to increased customer demand compared to the prior year period, partially offset by higher returns and allowances.
+Added: Wholesale sales decreased by $6.0 million, or 5.8% to $97.2 million during the 39 weeks ended January 28, 2023 from $103.2 million during the 39 weeks ended January 29, 2022.
+Added: The decrease is primarily due to lower gross sales impacted by supply constraints resulting from the lack of textbook purchasing opportunities during the prior fiscal year, a decrease in customer demand resulting from a shift in buying patterns from physical textbooks to digital products, and lower demand from other third-party clients, and higher returns and allowances.
+Added: DSS total sales decreased by $0.4 million, or 4.5% to $9.0 million during the 13 weeks ended January 28, 2023 from $9.4 million during the 13 weeks ended January 29, 2022.
+Added: Sales decreased in both Bartleby and Student Brands subscription sales.
+Added: DSS total sales increased by $0.7 million, or 2.5% to $26.7 million during the 39 weeks ended January 28, 2023 from $26.0 million during the 39 weeks ended January 29, 2022.
Sales increased primarily due to an increase in Student Brands subscription sales.
Cost of Sales and Gross Margin
−Removed: Our cost of sales decreased as a percentage of sales to 76.5% during the 13 weeks ended October 29, 2022 compared to 76.8% during the 13 weeks ended October 30, 2021.
−Removed: Our gross margin decreased by $0.7 million, or 0.5%, to $144.8 million, or 23.5% of sales, during the 13 weeks ended October 29, 2022 from $145.6 million, or 23.2% of sales during the 13 weeks ended October 30, 2021.
−Removed: Our cost of sales increased as a percentage of sales to 76.4% during the 26 weeks ended October 29, 2022 compared to 76.3% during the 26 weeks ended October 30, 2021.
−Removed: Our gross margin increased by $2.7 million, or 1.3%, to $208.3 million, or 23.6% of sales, during the 26 weeks ended October 29, 2022 from $205.6 million, or 23.7% of sales during the 13 weeks ended October 30, 2021.
−Removed: During the 26 weeks ended October 30, 2021, we recognized a merchandise inventory loss of $0.4 million in cost of goods sold in the Retail Segment discussed below.
+Added: Our cost of sales decreased as a percentage of sales to 76.7% during the 13 weeks ended January 28, 2023 compared to 78.4% during the 13 weeks ended January 29, 2022.
+Added: Our gross margin increased by $17.2 million, or 19.8%, to $104.2 million, or 23.3% of sales, during the 13 weeks ended January 28, 2023 from $87.0 million, or 21.6% of sales during the 13 weeks ended January 29, 2022.
+Added: Our cost of sales decreased as a percentage of sales to 76.5% during the 39 weeks ended January 28, 2023 compared to 77.0% during the 39 weeks ended January 29, 2022.
+Added: Our gross margin increased by $20.0 million, or 6.8%, to $312.5 million, or 23.5% of sales, during the 39 weeks ended January 28, 2023 from $292.5 million, or 23.0% of sales during the 39 weeks ended January 29, 2022.
+Added: During the 39 weeks ended January 29, 2022, we recognized a merchandise inventory loss of $0.4 million in cost of goods sold in the Retail Segment discussed below.
For additional information, see Item 1.
1 unchanged sentence
Summary of Significant Accounting Policies - Merchandise Inventories.
−Removed: The following table summarizes the Retail cost of sales for the 13 and 26 weeks ended October 29, 2022 and October 30, 2021:
+Added: The following table summarizes the Retail cost of sales for the 13 and 39 weeks ended January 28, 2023 and January 29, 2022:
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 % of
−Removed: Related Sales October 30, 2021 % of
−Removed: Related Sales October 29, 2022 % of
−Removed: Related Sales October 30, 2021 % of
+Added: Dollars in thousands January 28, 2023 % of
+Added: Related Sales January 29, 2022 % of
+Added: Related Sales January 28, 2023 % of
+Added: Related Sales January 29, 2022 % of
Related Sales
5 unchanged sentences
$ 332,333 78.9% $ 305,579 81.5% $ 983,955 78.3% $ 948,032 79.4%
−Removed: The following table summarizes the Retail gross margin for the 13 and 26 weeks ended October 29, 2022 and October 30, 2021:
+Added: The following table summarizes the Retail gross margin for the 13 and 39 weeks ended January 28, 2023 and January 29, 2022:
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 % of
−Removed: Related Sales October 30, 2021 % of
−Removed: Related Sales October 29, 2022 % of
−Removed: Related Sales October 30, 2021 % of
+Added: Dollars in thousands January 28, 2023 % of
+Added: Related Sales January 29, 2022 % of
+Added: Related Sales January 28, 2023 % of
+Added: Related Sales January 29, 2022 % of
Related Sales
4 unchanged sentences
$ 88,926 21.1% $ 69,161 18.5% $ 272,421 21.7% $ 246,129 20.6%
−Removed: For the 13 weeks ended October 29, 2022, the Retail gross margin as a percentage of sales increased as discussed below:
−Removed: • Product and other gross margin increased (70 basis points), driven primarily by a favorable sales mix (75 basis points) due to higher general merchandise sales and higher margin rates (5 basis points) due to lower markdowns, partially offset by higher contract costs as a percentage of sales related to our college and university contracts (10 basis points) resulting from contract renewals and new store contracts.
−Removed: • Rental gross margin increased (160 basis points), driven primarily by a favorable rental mix (205 basis points), and higher margin rates (85 basis points), partially offset by higher contract costs as a percentage of sales related to our college and university contracts (125 basis points) resulting from contract renewals and new store contracts.
−Removed: For the 26 weeks ended October 29, 2022, the Retail gross margin as a percentage of sales increased as discussed below:
−Removed: • Product and other gross margin increased (80 basis points), driven primarily by a favorable sales mix (155 basis points) due to higher general merchandise sales and higher margin rates (70 basis points) due to lower markdowns, partially offset by higher contract costs as a percentage of sales related to our college and university contracts (150 basis points) resulting from contract renewals and new store contracts.
−Removed: • Rental gross margin decreased (10 basis points), driven primarily by higher contract costs as a percentage of sales related to our college and university contracts (215 basis points) resulting from contract renewals and new store contracts, partially offset by a favorable rental mix (160 basis points) and higher rental margin rates (45 basis points).
−Removed: The cost of sales and gross margin for Wholesale were $15.7 million, or 74.2% of sales, and $5.5 million, or 25.8% of sales, respectively, during the 13 weeks ended October 29, 2022.
−Removed: The cost of sales and gross margin for Wholesale was $16.1 million or 74.1% of sales and $5.6 million or 25.9% of sales, respectively, during the 13 weeks ended October 30, 2021.
−Removed: The gross margin rate decreased during the 13 weeks ended October 29, 2022 primarily due to higher markdowns.
−Removed: The cost of sales and gross margin for Wholesale were $45.8 million, or 78.8% of sales, and $12.4 million, or 21.2% of sales, respectively, during the 26 weeks ended October 29, 2022.
−Removed: The cost of sales and gross margin for Wholesale was $50.1 million or 75.8% of sales and $16.0 million or 24.2% of sales, respectively, during the 26 weeks ended October 30, 2021.
−Removed: The gross margin rate decreased during the 26 weeks ended October 29, 2022 primarily due to higher markdowns.
−Removed: The gross margin for the DSS segment was $6.7 million, or 79.1% of sales, during the 13 weeks ended October 29, 2022 and $6.9 million, or 83.4% of sales, during the 13 weeks ended October 30, 2021.
−Removed: The gross margin for the DSS segment was $14.2 million, or 80.3% of sales, during the 26 weeks ended October 29, 2022 and $13.9 million, or 84.0% of sales, during the 26 weeks ended October 30, 2021.
+Added: For the 13 and 39 weeks ended January 28, 2023, the Retail Product and other gross margin as a percentage of sales increased as discussed below:
+Added: • For the 13 weeks ended January 28, 2023, Product and other gross margin increased (20 basis points), driven primarily by lower contract costs as a percentage of sales related to our college and university contracts (200 basis points) resulting from contract renewals and new store contracts, partially offset by lower margin rates (105 basis points) due to higher markdowns and an unfavorable sales mix (75 basis points) due to the increased shift to lower margin digital products.
+Added: • For the 39 weeks ended January 28, 2023, Product and other gross margin increased (60 basis points), driven primarily by a favorable sales mix (85 basis points) due to higher general merchandise sales and higher margin rates (10 basis points) due to lower markdowns, partially offset by higher contract costs as a percentage of sales related to our college and university contracts (40 basis points) resulting from contract renewals and new store contracts.
+Added: For the 13 and 39 weeks ended January 28, 2023, the Retail Rental gross margin as a percentage of sales increased driven primarily by higher rental margin rates primarily due to our First Day Complete program and favorable rental mix due to improved availability of used textbook inventory, partially offset by higher contract costs as a percentage of sales related to our college and university contracts resulting from contract renewals and new store contracts.
+Added: The cost of sales and gross margin for Wholesale were $32.3 million, or 82.9% of sales, and $6.7 million, or 17.1% of sales, respectively, during the 13 weeks ended January 28, 2023.
+Added: The cost of sales and gross margin for Wholesale was $28.9 million or 78.1% of sales and $8.1 million or 21.9% of sales, respectively, during the 13 weeks ended January 29, 2022.
+Added: The cost of sales and gross margin for Wholesale were $78.1 million, or 80.4% of sales, and $19.0 million, or 19.6% of sales, respectively, during the 39 weeks ended January 28, 2023.
+Added: The cost of sales and gross margin for Wholesale was $79.1 million or 76.6% of sales and $24.1 million or 23.4% of sales, respectively, during the 39 weeks ended January 29, 2022.
+Added: The gross margin rate decreased during both the 13 and 39 weeks ended January 28, 2023 primarily due to higher markdowns.
+Added: The gross margin for the DSS segment was $7.2 million, or 79.9% of sales, during the 13 weeks ended January 28, 2023 and $7.9 million, or 84.1% of sales, during the 13 weeks ended January 29, 2022.
+Added: The gross margin for the DSS segment was $21.4 million, or 80.2% of sales, during the 39 weeks ended January 28, 2023 and $21.9 million, or 84.1% of sales, during the 39 weeks ended January 29, 2022.
The high gross margins are driven primarily by high margin subscription service revenue earned.
Intercompany Eliminations
−Removed: During the 13 weeks ended October 29, 2022 and October 30, 2021, our sales eliminations were $(11.1) million and $(11.9) million, respectively.
−Removed: During the 26 weeks ended October 29, 2022 and October 30, 2021, our sales eliminations were $(30.0) million and $(34.4) million, respectively.
+Added: During the 13 weeks ended January 28, 2023 and January 29, 2022, our sales eliminations were $(22.2) million and $(18.4) million, respectively.
+Added: During the 39 weeks ended January 28, 2023 and January 29, 2022, our sales eliminations were $(52.2) million and $(52.8) million, respectively.
These sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.
−Removed: During the 13 weeks ended October 29, 2022 and October 30, 2021, the cost of sales eliminations were $(14.3) million and $(16.1) million, respectively.
−Removed: During the 26 weeks ended October 29, 2022 and October 30, 2021, the cost of sales eliminations were $(28.3) million and $(33.0) million, respectively.
−Removed: These cost of sales eliminations represent (i) the recognition of intercompany profit for Retail inventory that was purchased from Wholesale in a prior period that was subsequently sold to external customers during the current period and the elimination of Wholesale service fees charged for fulfillment of inventory for virtual store sales, net of (ii) the elimination of intercompany profit for Wholesale inventory purchases by Retail that remain in ending inventory at the end of the current period.
−Removed: During the 13 weeks ended October 29, 2022 and October 30, 2021, the gross margin eliminations were $3.2 million and $4.2 million, respectively.
−Removed: During the 26 weeks ended October 29, 2022 and October 30, 2021, the gross margin eliminations were $(1.7) million and $(1.3) million, respectively.
+Added: During the 13 weeks ended January 28, 2023 and January 29, 2022, the cost of sales eliminations were $(23.6) million and $(20.2) million, respectively.
+Added: During the 39 weeks ended January 28, 2023 and January 29, 2022, the cost of sales eliminations were $(51.9) million and $(53.2) million, respectively.
+Added: These cost of sales eliminations represent (i) the recognition of intercompany profit for Retail inventory that was purchased from Wholesale in a prior period that was subsequently sold to external customers during the current period and the elimination of Wholesale service fees charged for fulfillment of inventory
+Added: for virtual store sales, net of (ii) the elimination of intercompany profit for Wholesale inventory purchases by Retail that remain in ending inventory at the end of the current period.
+Added: During the 13 weeks ended January 28, 2023 and January 29, 2022, the gross margin eliminations were $1.4 million and $1.8 million, respectively.
+Added: During the 39 weeks ended January 28, 2023 and January 29, 2022, the gross margin eliminations were $(0.3) million and $0.4 million, respectively.
The gross margin eliminations reflect the net impact of the sales eliminations and cost of sales eliminations during the above mentioned reporting periods.
1 unchanged sentence
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 % of
−Removed: Sales October 30, 2021 % of
−Removed: Sales October 29, 2022 % of
−Removed: Sales October 30, 2021 % of
+Added: Dollars in thousands January 28, 2023 % of
+Added: Sales January 29, 2022 % of
+Added: Sales January 28, 2023 % of
+Added: Sales January 29, 2022 % of
Total Selling and Administrative Expenses
$ 99,473 22.3% $ 101,460 25.2% $ 305,045 23.0% $ 295,597 23.3%
−Removed: During the 13 weeks ended October 29, 2022, selling and administrative expenses decreased by $0.8 million, or 0.8%, to $107.1 million from $107.9 million during the 13 weeks ended October 30, 2021.
−Removed: During the 26 weeks ended October 29, 2022, selling and administrative expenses increased by $11.4 million, or 5.9%, to $205.6 million from $194.1 million during the 26 weeks ended October 30, 2021.
+Added: During the 13 weeks ended January 28, 2023, selling and administrative expenses decreased by $2.0 million, or 2.0%, to $99.5 million from $101.5 million during the 13 weeks ended January 29, 2022.
+Added: During the 39 weeks ended January 28, 2023, selling and administrative expenses increased by $9.4 million, or 3.2%, to $305.0 million from $295.6 million during the 39 weeks ended January 29, 2022.
The variances by segment are discussed by segment below.
−Removed: During the 13 weeks ended October 29, 2022, Retail selling and administrative expenses increased by $0.6 million, or 0.7%, to $90.1 million from $89.5 million during the 13 weeks ended October 30, 2021.
−Removed: This increase was primarily due to a $3.2 million increase in store payroll and operating costs primarily at new/closed stores and a $3.3 million increase in corporate payroll, infrastructure and product development costs, partially offset by a $5.9 million decrease in incentive plan compensation expense, including compensation expense related to phantom share awards.
−Removed: During the 26 weeks ended October 29, 2022, Retail selling and administrative expenses increased by $11.2 million, or 7.1%, to $169.1 million from $157.9 million during the 26 weeks ended October 30, 2021.
−Removed: This increase was primarily due to a $9.6 million increase in store payroll and operating costs primarily at new/closed stores and a $7.9 million increase in corporate payroll, infrastructure and product development costs, partially offset by a $6.3 million decrease in incentive plan compensation expense, including compensation expense related to phantom share awards.
+Added: During the 13 weeks ended January 28, 2023, Retail selling and administrative expenses decreased by $1.9 million, or 2.2%, to $82.7 million from $84.6 million during the 13 weeks ended January 29, 2022.
+Added: This decrease was primarily due to a $3.0 million decrease in comparable store payroll and operating costs primarily due to cost initiatives implemented during the quarter, and a $1.3 million decrease in incentive plan compensation expense, including compensation expense related to phantom share awards, partially offset by a $1.5 million increase in net new/closed store payroll and operating costs, and a $1.0 million increase in corporate payroll, infrastructure and product development costs.
+Added: During the 39 weeks ended January 28, 2023, Retail selling and administrative expenses increased by $9.3 million, or 3.9%, to $251.8 million from $242.5 million during the 39 weeks ended January 29, 2022.
+Added: This increase was primarily due to an increase in store payroll and operating costs at new/closed stores and comparable stores of $6.8 million and $1.3 million, respectively, and an $8.7 million increase in corporate payroll, infrastructure and product development costs, partially offset by a $7.6 million decrease in incentive plan compensation expense, including compensation expense related to phantom share awards.
The payroll increase is primarily related to increased staffing at stores that had temporarily or partially closed due to limited on campus activities related to the COVID-19 pandemic in the prior year.
−Removed: The increase is also due to greater on campus activity and related sales during the 26 weeks ended October 29, 2022 and costs to support the growth in First Day programs.
−Removed: Wholesale selling and administrative expenses decreased by $0.5 million, or 11.8%, to $3.9 million from $4.4 million during the 13 weeks ended October 30, 2021.
−Removed: Wholesale selling and administrative expenses decreased by $0.4 million, or 4.5%, to $8.0 million from $8.4 million during the 26 weeks ended October 30, 2021.
−Removed: For the 13 and 26 week periods, the decreases were primarily driven by lower compensation expense, including incentive plan compensation expense of $0.2 million and $0.3 million, respectively, partially offset by higher operating costs.
−Removed: During the 13 weeks ended October 29, 2022, DSS selling and administrative expenses increased by $0.8 million, or 11.3%, to $8.1 million from $7.3 million during the 13 weeks ended October 30, 2021.
−Removed: The increase in costs was primarily driven by an increase of $1.1 million in operating costs invested in the business associated with product development, sales and infrastructure costs aimed at increasing revenue, and an increase of $1.0 million in compensation expense, partially offset by lower incentive plan compensation expense of $1.3 million.
−Removed: During the 26 weeks ended October 29, 2022, DSS selling and administrative expenses increased by $2.5 million, or 18.4%, to $16.3 million from $13.8 million during the 26 weeks ended October 30, 2021.
+Added: The increase is also due to greater on campus activity and related sales during the 39 weeks ended January 28, 2023 and costs to support the growth in First Day programs.
+Added: Wholesale selling and administrative expenses decreased by $0.4 million, or 9.6%, to $3.5 million from $3.9 million during the 13 weeks ended January 29, 2022.
+Added: The decrease was primarily driven by lower compensation expense of $0.3 million, including incentive plan compensation expense, and lower operating costs of $0.1 million.
+Added: Wholesale selling and administrative expenses decreased by $0.7 million, or 6.2%, to $11.6 million from $12.3 million during the 39 weeks ended January 29, 2022.
+Added: The decrease was primarily driven by lower compensation expense, including incentive plan compensation expense of $0.6 million.
+Added: During the 13 weeks ended January 28, 2023, DSS selling and administrative expenses decreased by $0.2 million, or 1.8%, to $7.6 million from $7.8 million during the 13 weeks ended January 29, 2022.
+Added: The decrease in costs was primarily driven by a decrease of $0.4 million in incentive plan compensation expense, partially offset by higher compensation expense of $0.1 million and an increase of $0.1 million in operating costs invested in the business associated with product development, sales and infrastructure costs aimed at increasing revenue.
+Added: During the 39 weeks ended January 28, 2023, DSS selling and administrative expenses increased by $2.4 million, or 11.1%, to $23.9 million from $21.5 million during the 39 weeks ended January 29, 2022.
The increase in costs was primarily driven by an increase of $1.4 million in compensation expense and an increase of $1.6 million in operating costs invested in the business associated with product development, sales and infrastructure costs aimed at increasing revenue, partially offset by lower incentive plan compensation expense of $0.6 million.
1 unchanged sentence
Corporate Services
−Removed: During the 13 weeks ended October 29, 2022, Corporate Services' selling and administrative expenses decreased by $1.7 million, or 25.5%, to $5.1 million from $6.8 million during the 13 weeks ended October 30, 2021.
−Removed: During the 26 weeks ended October 29, 2022, Corporate Services' selling and administrative expenses decreased by $2.0 million, or 13.8%, to $12.3 million from $14.3 million during the 26 weeks ended October 30, 2021.
−Removed: The decrease in costs was primarily due to lower incentive plan compensation costs, including incentive plan compensation expense related to phantom share awards.
+Added: During the 13 weeks ended January 28, 2023, Corporate Services' selling and administrative expenses increased by $0.4 million, or 8.1%, to $5.6 million from $5.2 million during the 13 weeks ended January 29, 2022.
+Added: The increase in costs was primarily due to higher compensation expense of $0.6 million and higher professional service costs of $0.3 million, partially offset by lower incentive plan compensation costs of $0.5 million.
+Added: During the 39 weeks ended January 28, 2023, Corporate Services' selling and administrative expenses decreased by $1.5 million, or 8.0%, to $17.9 million from $19.4 million during the 39 weeks ended January 29, 2022.
+Added: The decrease in costs was primarily due to lower incentive plan compensation costs of $2.7 million, primarily related to phantom share awards, partially offset by higher professional service costs of $0.8 million and higher compensation expense of $0.4 million.
Depreciation and Amortization Expense
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 % of
−Removed: Sales October 30, 2021 % of
−Removed: Sales October 29, 2022 % of
−Removed: Sales October 30, 2021 % of
+Added: Dollars in thousands January 28, 2023 % of
+Added: Sales January 29, 2022 % of
+Added: Sales January 28, 2023 % of
+Added: Sales January 29, 2022 % of
Total Depreciation and Amortization Expense
$ 10,618 2.4% $ 12,179 3.0% $ 33,910 2.6% $ 36,755 2.9%
−Removed: Depreciation and amortization expense decreased by $1.2 million, or 10.0%, to $10.8 million during the 13 weeks ended October 29, 2022 from $12.0 million during the 13 weeks ended October 30, 2021.
−Removed: Depreciation and amortization expense decreased by $1.3 million, or 5.2%, to $23.3 million during the 26 weeks ended October 29, 2022 from $24.6 million during the 26 weeks ended October 30, 2021.
−Removed: The decrease was primarily attributable to lower depreciable assets and intangibles due to the store impairment loss recognized during Fiscal 2022.
+Added: Depreciation and amortization expense decreased by $1.6 million, or 12.8%, to $10.6 million during the 13 weeks ended January 28, 2023 from $12.2 million during the 13 weeks ended January 29, 2022.
+Added: Depreciation and amortization expense decreased by $2.8 million, or 7.7%, to $33.9 million during the 39 weeks ended January 28, 2023 from $36.8 million during the 39 weeks ended January 29, 2022.
+Added: The decrease was primarily attributable to lower depreciable assets and intangibles due to the store impairment loss recognized during Fiscal 2023 and Fiscal 2022.
+Added: Impairment Loss (non-cash)
+Added: We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets .
+Added: During the 13 and 39 weeks ended January 28, 2023, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.
+Added: Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $6.0 million (both pre-tax and after-tax), comprised of $0.7 million, $1.7 million, and $3.6 million of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the condensed consolidated statement of operations.
+Added: During the 13 and 39 weeks ended January 29, 2022, we evaluated certain of our store-level long-lived assets in the Retail segment for impairment.
+Added: Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $6.4 million (both pre-tax and after-tax), comprised of $0.7 million, $1.8 million, $3.7 million and $0.2 million of property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets, respectively, on the condensed consolidated statement of operations.
+Added: For additional information, see Item 1.
+Added: Financial Statements - Note 2.
+Added: Summary of Significant Accounting Policies and Note 6.
+Added: Fair Value Measurements .
Restructuring and other charges
−Removed: During the 13 and 26 weeks ended October 29, 2022, we recognized restructuring and other charges totaling $0.3 million and $0.6 million, respectively, comprised primarily of professional service costs for restructuring and process improvements.
−Removed: During the 13 and 26 weeks ended October 30, 2021, we recognized restructuring and other charges totaling $1.1 million and $3.0 million, respectively, comprised primarily of $0.4 million and $1.3 million, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, and $0.7 million and $1.7 million, respectively, for costs associated with professional service costs for restructuring, process improvements, development and integration associated with the FLC Partnership, shareholder activist activities, and liabilities for a facility closure.
−Removed: Operating Income (Loss)
+Added: During the 13 and 39 weeks ended January 28, 2023, we recognized restructuring and other charges totaling $6.0 million and $6.6 million, respectively, comprised primarily of $4.7 million in each period for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, and $1.3 million and $1.9 million, respectively, primarily for costs primarily associated with professional service costs for restructuring and process improvements.
+Added: During the 13 and 39 weeks ended January 29, 2022, we recognized restructuring and other charges totaling $0 and $3.1 million, respectively.
+Added: The $3.1 million for the 39 weeks ended January 29, 2022 is comprised primarily of $1.3 million for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, and $1.8 million for costs primarily associated with professional service costs for restructuring, process improvements, and development and integration associated with the F/L Partnership.
+Added: Operating Loss
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 % of
−Removed: Sales October 30, 2021 % of
−Removed: Sales October 29, 2022 % of
−Removed: Sales October 30, 2021 % of
−Removed: Total Operating Income (Loss) $ 26,730 4.4% $ 24,589 3.9% $ (21,176) (2.4)% $ (16,146) (1.8)%
−Removed: Our operating income was $26.7 million during the 13 weeks ended October 29, 2022, compared to operating income of $24.6 million during the 13 weeks ended October 30, 2021.
−Removed: The increase in operating income is due to the matters discussed above.
−Removed: For the 13 weeks ended October 29, 2022, excluding the $0.3 million of restructuring and other charges, discussed above, operating income was $27.0 million (or 4.4% of sales).
−Removed: For the 13 weeks ended October 30, 2021, excluding the $1.1 million of restructuring and other charges, discussed above, operating income was $25.7 million (or 4.1% of sales).
−Removed: Our operating loss was $(21.2) million during the 26 weeks ended October 29, 2022, compared to operating loss of $(16.1) million during the 26 weeks ended October 30, 2021.
−Removed: The increase in operating loss is due to the matters discussed above.
−Removed: For the 26 weeks ended October 29, 2022, excluding the $0.6 million of restructuring and other charges, discussed above, operating loss was $(20.5) million (or (2.3)% of sales).
−Removed: For the 26 weeks ended October 30, 2021, excluding the $0.4 million of merchandise inventory loss and the $3.0 million of restructuring and other charges, discussed above, operating loss was $(12.7) million (or (1.5)% of sales).
+Added: Dollars in thousands January 28, 2023 % of
+Added: Sales January 29, 2022 % of
+Added: Sales January 28, 2023 % of
+Added: Sales January 29, 2022 % of
+Added: Total Operating Loss $ (17,864) (4.0)% $ (33,135) (8.2)% $ (39,040) (3.1)% $ (49,281) (3.9)%
+Added: Our operating loss was $(17.9) million during the 13 weeks ended January 28, 2023, compared to operating loss of $(33.1) million during the 13 weeks ended January 29, 2022.
+Added: The decrease in operating loss is due to the matters discussed above.
+Added: For the 13 weeks ended January 28, 2023, excluding the $6.0 million of impairment loss (non-cash) and $6.0 million of restructuring and other charges, discussed above, operating loss was $(5.9) million (or (1.3)% of sales).
+Added: For the 13 weeks ended January 29, 2022, excluding the $6.4 million of impairment loss (non-cash), discussed above, operating loss was $(26.7) million (or (6.6)% of sales).
+Added: Our operating loss was $(39.0) million during the 39 weeks ended January 28, 2023, compared to operating loss of $(49.3) million during the 39 weeks ended January 29, 2022.
+Added: The decrease in operating loss is due to the matters discussed above.
+Added: For the 39 weeks ended January 28, 2023, excluding the $6.0 million of impairment loss (non-cash) and $6.6 million of restructuring and other charges, discussed above, operating loss was $(26.4) million (or (2.0)% of sales).
+Added: For the 39 weeks ended January 29, 2022, excluding the $0.4 million of merchandise inventory loss, the $6.4 million of impairment loss (non-cash) and the $3.1 million of restructuring and other charges, discussed above, operating loss was $(39.4) million (or (3.1)% of sales).
Interest Expense, Net
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
+Added: Dollars in thousands January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
Interest Expense, Net $ 6,918 $ 3,051 $ 15,672 $ 7,809
−Removed: Net interest expense increased by $2.6 million to $4.9 million during the 13 weeks ended October 29, 2022 from $2.3 million during the 13 weeks ended October 30, 2021.
−Removed: Net interest expense increased by $4.0 million to $8.8 million during the 26 weeks ended October 29, 2022 from $4.8 million during the 26 weeks ended October 30, 2021.
+Added: Net interest expense increased by $3.9 million to $6.9 million during the 13 weeks ended January 28, 2023 from $3.1 million during the 13 weeks ended January 29, 2022.
+Added: Net interest expense increased by $7.9 million to $15.7 million during the 39 weeks ended January 28, 2023 from $7.8 million during the 39 weeks ended January 29, 2022.
The increase was primarily due to higher borrowings and higher interest rates compared to the prior year.
−Removed: Income Tax (Benefit) Expense
+Added: Income Tax Expense
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 Effective Rate October 30, 2021 Effective Rate October 29, 2022 Effective Rate October 30, 2021 Effective Rate
−Removed: Income Tax Expense (Benefit) $ (300) (1.4)% $ (203) (0.9)% $ 633 (2.1)% $ 196 (0.9)%
−Removed: We recorded an income tax benefit of $(0.3) million on pre-tax income of $21.8 million during the 13 weeks ended October 29, 2022, which represented an effective income tax rate of (1.4)% and we recorded an income tax benefit of $(0.2) million on a pre-tax income of $22.3 million during the 13 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)%.
−Removed: We recorded an income tax expense of $0.6 million on pre-tax loss of $(29.9) million during the 26 weeks ended October 29, 2022, which represented an effective income tax rate of (2.1)% and we recorded an income tax expense of $0.2 million on a pre-tax loss of $(20.9) million during the 26 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)%.
−Removed: The effective tax rate for the 13 and 26 weeks ended October 29, 2022 is lower as compared to the prior year comparable period due to foreign taxes and lower projected annual taxable loss in the current year.
−Removed: Net Income (Loss)
+Added: Dollars in thousands January 28, 2023 Effective Rate January 29, 2022 Effective Rate January 28, 2023 Effective Rate January 29, 2022 Effective Rate
+Added: Income Tax Expense $ 267 (1.1)% $ 615 (1.7)% $ 900 (1.6)% $ 811 (1.4)%
+Added: We recorded an income tax expense of $0.3 million on pre-tax loss of $(24.8) million during the 13 weeks ended January 28, 2023, which represented an effective income tax rate of (1.1)% and we recorded an income tax expense of $0.6 million on a pre-tax loss of $(36.2) million during the 13 weeks ended January 29, 2022, which represented an effective income tax rate of (1.7)%.
+Added: We recorded an income tax expense of $0.9 million on pre-tax loss of $(54.7) million during the 39 weeks ended January 28, 2023, which represented an effective income tax rate of (1.6)% and we recorded an income tax expense of $0.8 million on a pre-tax loss of $(57.1) million during the 39 weeks ended January 29, 2022, which represented an effective income tax rate of (1.4)%.
+Added: The effective tax rate for the 13 weeks ended January 28, 2023 is higher as compared to the prior year comparable period due to state tax adjustments recorded in the prior year.
+Added: The effective tax rate for the 39 weeks ended January 28, 2023 is lower as compared to the prior year comparable period due to foreign taxes and lower projected annual taxable loss in the current year.
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
−Removed: Net income (loss) $ 22,144 $ 22,528 $ (30,563) $ (21,100)
−Removed: As a result of the factors discussed above, net income was $22.1 million during the 13 weeks ended October 29, 2022, compared with net income of $22.5 million during the 13 weeks ended October 30, 2021.
−Removed: As a result of the factors discussed
−Removed: above, net loss was $(30.6) million during the 26 weeks ended October 29, 2022, compared with net loss of $(21.1) million during the 26 weeks ended October 30, 2021.
−Removed: Adjusted Earnings (non-GAAP) is $24.0 million during the 13 weeks ended October 29, 2022, compared with $25.0 million during the 13 weeks ended October 30, 2021.
−Removed: Adjusted Earnings (non-GAAP) is $(26.7) million during the 26 weeks ended October 29, 2022, compared with $(15.1) million during the 26 weeks ended October 30, 2021.
+Added: Dollars in thousands January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
+Added: Net loss $ (25,049) $ (36,801) $ (55,612) $ (57,901)
+Added: As a result of the factors discussed above, net loss was $(25.0) million during the 13 weeks ended January 28, 2023, compared with net loss of $(36.8) million during the 13 weeks ended January 29, 2022.
+Added: As a result of the factors discussed above, net loss was $(55.6) million during the 39 weeks ended January 28, 2023, compared with net loss of $(57.9) million during the 39 weeks ended January 29, 2022.
+Added: Adjusted Earnings (non-GAAP) is $(11.4) million during the 13 weeks ended January 28, 2023, compared with $(28.9) million during the 13 weeks ended January 29, 2022.
+Added: Adjusted Earnings (non-GAAP) is $(38.1) million during the 39 weeks ended January 28, 2023, compared with $(44.0) million during the 39 weeks ended January 29, 2022.
See Adjusted Earnings (non-GAAP) discussion below.
18 unchanged sentences
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
−Removed: Net income (loss) $ 22,144 $ 22,528 $ (30,563) $ (21,100)
−Removed: Reconciling items, after-tax (below)
+Added: Dollars in thousands January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
+Added: Net loss $ (25,049) $ (36,801) $ (55,612) $ (57,901)
+Added: Reconciling items (below)
13,669 7,855 17,499 13,896
Adjusted Earnings (non-GAAP) $ (11,380) $ (28,946) $ (38,113) $ (44,005)
−Removed: Reconciling items, pre-tax
−Removed: Merchandise inventory loss (a)
+Added: Reconciling items
+Added: Impairment loss (non-cash) (a)
$ 6,008 $ 6,411 $ 6,008 $ 6,411
+Added: Merchandise inventory loss (a)
Content amortization (non-cash)
2 unchanged sentences
5,975 46 6,610 3,067
−Removed: Reconciling items, pre-tax 1,878 2,427 3,830 6,041
−Removed: Pro forma income tax impact (a)(b)
−Removed: Reconciling items, after-tax $ 1,878 $ 2,427 $ 3,830 $ 6,041
+Added: Reconciling items (b)
+Added: $ 13,669 $ 7,855 $ 17,499 $ 13,896
(a) See Management Discussion and Analysis and Results of Operations discussion above.
−Removed: (b) Represents the income tax effects of the non-GAAP items.
+Added: (b) There is no pro forma income effect of the non-GAAP items.
Consolidated Adjusted EBITDA (non-GAAP)
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
−Removed: Net income (loss) $ 22,144 $ 22,528 $ (30,563) $ (21,100)
+Added: Dollars in thousands January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
+Added: Net loss $ (25,049) $ (36,801) $ (55,612) $ (57,901)
Depreciation and amortization expense 10,618 12,179 33,910 36,755
Interest expense, net 6,918 3,051 15,672 7,809
−Removed: Income tax (benefit) expense (300) (203) 633 196
+Added: Income tax expense 267 615 900 811
+Added: Impairment loss (non-cash) (a)
+Added: 6,008 6,411 6,008 6,411
Merchandise inventory loss (a)
5 unchanged sentences
(a) See Management Discussion and Analysis and Results of Operations discussion above.
−Removed: The following is Adjusted EBITDA by segment for the 13 and 26 weeks ended October 29, 2022 and October 30, 2021.
−Removed: Adjusted EBITDA - by Segment 13 weeks ended October 29, 2022
+Added: The following is Adjusted EBITDA by segment for the 13 and 39 weeks ended January 28, 2023 and January 29, 2022.
+Added: Adjusted EBITDA - by Segment 13 weeks ended January 28, 2023
Dollars in thousands Retail Wholesale DSS Corporate Services (a)
Eliminations Total
−Removed: Net income (loss) $ 30,547 $ 218 $ (1,941) $ (9,938) $ 3,258 $ 22,144
+Added: Net (loss) income $ (10,036) $ 817 $ (2,787) $ (14,507) $ 1,464 $ (25,049)
Depreciation and amortization expense 8,749 1,357 506 6 — 10,618
Interest expense, net — — — 6,918 — 6,918
−Removed: Income tax benefit — — — (300) — (300)
+Added: Income tax expense — — — 267 — 267
+Added: Impairment loss (non-cash) (a)
+Added: 6,008 — — — — 6,008
Content amortization (non-cash) — — 1,686 — — 1,686
2 unchanged sentences
Adjusted EBITDA (non-GAAP) $ 6,173 $ 3,105 $ 1,253 $ (5,572) $ 1,464 $ 6,423
−Removed: Adjusted EBITDA - by Segment 13 weeks ended October 30, 2021
+Added: Adjusted EBITDA - by Segment 13 weeks ended January 29, 2022
Dollars in thousands Retail Wholesale DSS Corporate Services (a)
Eliminations Total
−Removed: Net income (loss) $ 29,595 $ (131) $ (2,301) $ (8,928) $ 4,293 $ 22,528
+Added: Net (loss) income $ (30,845) $ 2,767 $ (1,669) $ (8,854) $ 1,800 $ (36,801)
Depreciation and amortization expense 8,939 1,396 1,826 18 — 12,179
Interest expense, net — — — 3,051 — 3,051
−Removed: Income tax benefit — — — (203) — (203)
+Added: Income tax expense — — — 615 — 615
+Added: Impairment loss (non-cash) (a)
+Added: 6,411 — — — — 6,411
Content amortization (non-cash) 79 — 1,319 — — 1,398
2 unchanged sentences
Adjusted EBITDA (non-GAAP) $ (15,386) $ 4,163 $ 1,476 $ (5,154) $ 1,800 $ (13,101)
−Removed: Adjusted EBITDA - by Segment 26 weeks ended October 29, 2022
+Added: Adjusted EBITDA - by Segment 39 weeks ended January 28, 2023
Dollars in thousands Retail Wholesale DSS Corporate Services (a)
4 unchanged sentences
Income tax expense — — — 900 — 900
+Added: Impairment loss (non-cash) (a)
+Added: 6,008 — — — — 6,008
Content amortization (non-cash) 26 — 4,855 — — 4,881
2 unchanged sentences
Adjusted EBITDA (non-GAAP) $ 20,604 $ 7,461 $ 2,322 $ (17,861) $ (157) $ 12,369
−Removed: Adjusted EBITDA - by Segment 26 weeks ended October 30, 2021
+Added: Adjusted EBITDA - by Segment 39 weeks ended January 29, 2022
Dollars in thousands Retail Wholesale DSS Corporate Services (a)
4 unchanged sentences
Income tax expense — — — 811 — 811
+Added: Impairment loss (non-cash) (a)
+Added: 6,411 — — — — 6,411
Merchandise inventory loss (b)
9 unchanged sentences
13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
−Removed: Net cash flows provided by operating activities $ 38,374 $ 41,580 $ 9,376 $ 24,276
+Added: Dollars in thousands January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
+Added: Net cash flows (used in) provided by operating activities $ (31,958) $ (16,375) $ (22,582) $ 7,901
Capital expenditures (a)
7 unchanged sentences
Capital Expenditures 13 weeks ended 39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
+Added: Dollars in thousands January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
Physical store capital expenditures $ 1,700 $ 5,081 $ 12,248 $ 12,561
5 unchanged sentences
Our primary sources of cash are net cash flows from operating activities, funds available under our credit agreement and short-term vendor financing.
−Removed: As of October 29, 2022, we had $222.0 million and $30.0 million outstanding borrowings under the Credit Agreement and Term Loan Agreement, respectively.
+Added: As of January 28, 2023, we had $255.6 million and $30.0 million outstanding borrowings under the Credit Agreement and Term Loan Agreement, respectively.
See Financing Arrangements discussion below.
+Added: On March 8, 2023, subsequent to quarter end, we amended our existing Credit Agreement to, among other things, extend the maturity date thereunder by six months to August 29, 2024.
+Added: The amendment also reduces the commitments under the Credit Agreement by $20,000 to $380,000.
+Added: On March 8, 2023, subsequent to quarter end, we amended the Term Loan Credit Agreement to, among other things, extend the maturity date thereunder by six months to December 7, 2024.
+Added: For additional information, see Financing Arrangements below .
We believe that our future cash from operations, access to borrowings under the Credit Agreement and Term Loan Agreement will provide adequate resources to fund our operating and financing needs for the foreseeable future.
5 unchanged sentences
Our business has been significantly negatively impacted by the COVID-19 pandemic, as many schools adjusted their learning models and on-campus activities.
−Removed: Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve.
However, on campus traffic continues to grow from increased campus events and activities, as compared to the last two years.
−Removed: We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including variants, on enrollments, campus activities, university budgets, athletics and other areas that directly affect our business operations .
+Added: Our third quarter 2022 results were negatively impacted by a Covid variant experienced on campuses across the country during the 2022 Spring Term which did not recur during the 2023 Spring Term.
+Added: While the impact of COVID-19 pandemic are lessening, we cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including variants, on enrollments, campus activities, university budgets, athletics and other areas that
+Added: directly affect our business operations .
Although most four year schools returned to a traditional on-campus environment for learning, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings.
3 unchanged sentences
39 weeks ended
−Removed: Dollars in thousands October 29, 2022 October 30, 2021
+Added: Dollars in thousands January 28, 2023 January 29, 2022
Cash, cash equivalents, and restricted cash at beginning of period $ 21,934 $ 16,814
−Removed: Net cash flows provided by operating activities 9,376 24,276
+Added: Net cash flows (used in) provided by operating activities (22,582) 7,901
Net cash flows used in investing activities (26,327) (32,659)
1 unchanged sentence
Cash, cash equivalents, and restricted cash at end of period $ 29,447 $ 12,742
−Removed: As of October 29, 2022 and October 30, 2021, we had restricted cash of $15.6 million and $12.5 million, respectively, comprised of $14.7 million and $11.6 million, respectively, in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the FLC Partnership's merchandising agreement and $0.9 million for both periods in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.
+Added: As of January 28, 2023 and January 29, 2022, we had restricted cash of $18.3 million and $2.8 million, respectively, comprised of $17.4 million and $1.9 million, respectively, in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to Lids for logo merchandise sales as per the F/L Partnership's merchandising agreement and $0.9 million for both periods in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.
Cash Flow from Operating Activities
1 unchanged sentence
For our retail operations, cash flows from operating activities are typically a source of cash in the second and third fiscal quarters, when students generally purchase and rent textbooks and other course materials for the upcoming semesters based on the typical academic semester.
−Removed: When a school adopts our First Day inclusive and equitable access offerings, cash collection from the school generally occurs after the student drop/add dates, which is later in the working capital cycle, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor.
+Added: Given the growth of First Day programs and the timing of cash collection from our school partners, the third fiscal quarter which has been a source of cash has shifted to the fourth quarter.
+Added: When a school adopts our First Day inclusive and equitable access offerings, cash collection from the school generally occurs after the student drop/add dates, which is later in the working capital cycle, particularly in our third quarter given the timing of the Spring Term and our quarterly reporting period, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor.
As a higher percentage of our sales shift to First Day inclusive and equitable access offerings, we are focused on efforts to better align the timing of our cash outflows to course material vendors with cash inflows collected from schools.
4 unchanged sentences
These shifts in timing may affect the comparability of our results across periods.
−Removed: Cash flows provided by operating activities during the 26 weeks ended October 29, 2022 were $9.4 million compared to $24.3 million during the 26 weeks ended October 30, 2021.
−Removed: This decrease in cash flows provided by operating activities of $14.9 million was primarily due to changes in working capital, including higher inventory purchases, partially offset by lower receivables and lower earnings in the current year period compared to the prior year period.
+Added: Cash flows used in operating activities during the 39 weeks ended January 28, 2023 were $(22.6) million compared to cash flows provided by operating activities $7.9 million during the 39 weeks ended January 29, 2022.
+Added: This decrease in cash flows provided by operating activities of $30.5 million was primarily due to changes in our working capital in our third quarter due to increased adoption of our First Day inclusive and equitable access offering in the third quarter of 2023 compared to 2022.
+Added: During the 13 weeks ended January 28, 2023, First Day Complete sales increased $28.9 million to $66.9 million, or 76%, as compared to $38.0 million in the prior year period, which resulted in higher inventory purchases and higher receivables, offset by higher payables and right-of-use payments during the third quarter in the current year period compared to the prior year period.
Cash Flow from Investing Activities
−Removed: Cash flows used in investing activities during the 26 weeks ended October 29, 2022 were $(20.3) million compared to $(20.9) million during the 26 weeks ended October 30, 2021.
−Removed: The decrease in cash used in investing activities is primarily due to lower capital expenditures and contractual capital investments associated with content development, digital initiatives, enhancements to internal systems and websites, and new store construction.
−Removed: Capital expenditures totaled $20.6 million and $21.3 million during the 26 weeks ended October 29, 2022 and October 30, 2021, respectively.
+Added: Cash flows used in investing activities during the 39 weeks ended January 28, 2023 were $(26.3) million compared to $(32.7) million during the 39 weeks ended January 29, 2022.
+Added: The decrease in cash used in investing activities is primarily due to lower capital expenditures and contractual capital investments associated with content development, digital initiatives,
+Added: enhancements to internal systems and websites, and new store construction.
+Added: Capital expenditures totaled $26.9 million and $33.4 million during the 39 weeks ended January 28, 2023 and January 29, 2022, respectively.
Cash Flow from Financing Activities
−Removed: Cash flows provided by financing activities during the 26 weeks ended October 29, 2022 were $23.7 million compared to $3.4 million during the 26 weeks ended October 30, 2021.
+Added: Cash flows provided by financing activities during the 39 weeks ended January 28, 2023 were $56.4 million compared to $20.7 million during the 39 weeks ended January 29, 2022.
This net change of $35.7 million is primarily due to higher net borrowings.
1 unchanged sentence
Credit Facility
−Removed: We have a credit agreement (the “Credit Agreement”), amended March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a 5-year asset-backed revolving credit facility in an aggregate committed principal amount of $400 million (the “Credit Facility”) effective from the March 1, 2019 amendment.
−Removed: We have the option to request an increase in commitments under the Credit Facility of up to $100 million, subject to certain restrictions.
+Added: We have a credit agreement (the “Credit Agreement”), amended from time to time, including on March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a 5-year asset-backed revolving credit facility in an aggregate committed principal amount of $400 million (the “Credit Facility”) effective from the March 1, 2019 amendment.
+Added: We had the option to request an increase in commitments under the Credit Facility of up to $100 million, subject to certain restrictions.
Proceeds from the Credit Facility are used for general corporate purposes, including seasonal working capital needs.
−Removed: The agreement includes an
−Removed: incremental first in, last out seasonal loan facility (the “FILO Facility”) for a $100 million incremental facility maintaining the maximum availability under the Credit Agreement at $500 million.
−Removed: As of October 29, 2022, we were in compliance with all debt covenants under the Credit Agreement.
−Removed: On March 4, 2022, we were granted a waiver to the condition to the draw scheduled for April 2022 under the FILO Facility, that Consolidated EBITDA (as defined in the Credit Agreement) minus Restricted Payments (as defined in the Credit Agreement) equal at least $110.0 million.
−Removed: Under the waiver amendment, the commitment under the FILO Facility of $25.0 million was increased to $40.0 million, with all remaining terms unchanged.
−Removed: During the 26 weeks ended October 29, 2022, we borrowed $318.2 million and repaid $321.9 million under the Credit Agreement, with $222.0 million of outstanding borrowings as of October 29, 2022, comprised entirely of borrowings under the Credit Facility.
−Removed: During the 26 weeks ended October 30, 2021, we borrowed $259.7 million and repaid $254.0 million under the Credit Agreement, with $183.3 million of outstanding borrowings as of October 30, 2021, comprised entirely of borrowings under the Credit Facility.
−Removed: As of both October 29, 2022 and October 30, 2021, we have issued $4.8 million in letters of credit under the Credit Facility.
+Added: The agreement included an incremental first in, last out seasonal loan facility (the “FILO Facility”) for a $100 million maintaining the maximum availability under the Credit Agreement at $500 million.
+Added: From and after July 31, 2022, commitments under the FILO Facility were reduced to $0.
+Added: As of January 28, 2023, we were in compliance with all debt covenants under the Credit Agreement.
+Added: On March 8, 2023, subsequent to quarter end, we amended our existing Credit Agreement to (i) extend the maturity date of the Credit Agreement by six months to August 29, 2024, (ii) reduce the commitments under the Credit Agreement by $20 million to $380 million, (iii) increase the applicable margin with respect to the interest rate under the Credit Agreement to 3.375% per annum, in the case of interest accruing based on a Secured Overnight Financing Rate, and 2.375%, in the case of interest accruing based on an alternative base rate, in each case, without regard to a pricing grid, (iv) reduce advance rates with respect to the borrowing base (x) by 500 basis points upon the achievement of certain liquidity events, which may include a sale of equity interests or of assets (a “Specified Event”), or, if such a Specified Event shall not have occurred, on May 31, 2023 and (y) by an additional 500 basis points on September 29, 2023, (v) amend certain negative covenants and add certain additional covenants, (vi) amend the financial maintenance covenant to require Availability (as defined in the Credit Agreement) to be at all times greater than the greater of 10% of the Aggregate Loan Cap (as defined in the Credit Agreement) and $32.5 million and (vii) require repayment of the loans under the Credit Agreement upon a Specified Event.
+Added: In addition, the amendment requires the achievement of a Specified Event by no later than May 31, 2023 (as such date may be extended pursuant to the terms fo the Credit Agreement).
+Added: During the 39 weeks ended January 28, 2023, we borrowed $512.0 million and repaid $452.1 million under the Credit Agreement, with $255.6 million of outstanding borrowings as of January 28, 2023, comprised entirely of borrowings under the Credit Facility.
+Added: During the 39 weeks ended January 29, 2022, we borrowed $463.2 million and repaid $440.4 million under the Credit Agreement, with $200.4 million of outstanding borrowings as of January 29, 2022, comprised entirely of borrowings under the Credit Facility.
+Added: As of both January 28, 2023 and January 29, 2022, we have issued $4.8 million in letters of credit under the Credit Facility.
For additional information including interest terms and covenant requirements related to the Credit Facility and FILO Facility, refer to Part II - Item 7.
4 unchanged sentences
The proceeds of the Term Loans are being used to finance working capital, and to pay fees and expenses related to the Term Loan Facility.
−Removed: During the 26 weeks ended October 29, 2022, we borrowed $30.0 million and repaid $0 under the Term Loan Credit Agreement, with $30.0 million of outstanding borrowings as of October 29, 2022.
+Added: During the 39 weeks ended January 28, 2023, we borrowed $30.0 million and repaid $0 under the Term Loan Credit Agreement, with $30.0 million of outstanding borrowings as of January 28, 2023.
We incurred debt issuance costs totaling $2.6 million related to the Term Loan Credit Agreement.
2 unchanged sentences
We have the right, through December 31, 2022, to pay all or a portion of the interest on the Term Loans in kind.
−Removed: To date, all interest on the term loan has been paid in cash.
+Added: To date, all interest on the
+Added: term loan has been paid in cash.
The Term Loans do not amortize prior to maturity.
Solely to the extent that any Term Loans remain outstanding on June 7, 2023, we must pay a fee of 1.5% of the outstanding principal amount of the Term Loans on such date.
−Removed: The Term Loans are required to be repaid (i) after repayment of the FILO Facility under the Credit Agreement, with up to 100% of the proceeds of the sale of a non-core business line of the Company generating net proceeds in excess of $1.0 million, other than ordinary course dispositions and (ii) in full in connection with a debt or equity financing transaction generating net proceeds in excess of an amount sufficient to repay the FILO Facility under the Credit Agreement.
−Removed: The Term Loan Credit Agreement does not contain a financial covenant, but otherwise contains representations and warranties, covenants and events of default that are substantially the same as those in the Credit Agreement, including restrictions on the ability of the Company and its subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and make dividends and distributions.
+Added: On March 8, 2023, subsequent to quarter end, we extended and amended the Term Loan Credit Agreement to (i) extend the maturity date of the Term Loan Credit Agreement by six months to December 7, 2024, (ii) permit the application of certain proceeds to the repayment of the loans under Credit Agreement and (iii) amend certain negative covenants and add certain additional covenants.
+Added: In addition, the amendment requires the achievement of a Specified Event (as described above) no later than May 31, 2023.
+Added: We paid a fee of $0.05 million on the amendment closing date to the lenders under the Term Loan Credit Agreement.
+Added: For additional information related to the Credit Agreement amendment and the Term Loan Agreement amendment, see the Company’s Report on Form 8-K dated March 8, 2023 and filed with the SEC on March 9, 2023.The Term Loan Credit Agreement does not contain a financial covenant, but otherwise contains representations and warranties, covenants and events of default that are substantially the same as those in the Credit Agreement, including restrictions on the ability of the Company and its subsidiaries to incur additional debt, incur or permit liens on assets, make investments and acquisitions, consolidate or merge with any other company, engage in asset sales and make dividends and distributions.
The Term Loan Facility is secured by second-priority liens on all assets securing the obligations under the Credit Agreement, which is all of the assets of the Company and the Guarantors, subject to customary exclusions and limitations set forth in the Term Loan Credit Agreement and the other loan documents executed in connection therewith.
7 unchanged sentences
Share Repurchases
−Removed: During the 26 weeks ended October 29, 2022, we did not repurchase any of our Common Stock under the stock repurchase program.
−Removed: As of October 29, 2022, approximately $26.7 million remains available under the stock repurchase program.
−Removed: During the 26 weeks ended October 29, 2022, we repurchased 344,587 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.
+Added: During the 39 weeks ended January 28, 2023, we did not repurchase any of our Common Stock under the stock repurchase program.
+Added: As of January 28, 2023, approximately $26.7 million remains available under the stock repurchase program.
+Added: During the 39 weeks ended January 28, 2023, we repurchased 347,808 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.
Contractual Obligations
2 unchanged sentences
Off-Balance Sheet Arrangements
−Removed: As of October 29, 2022, we have no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.
+Added: As of January 28, 2023, we have no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.
Critical Accounting Policies
53 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.