What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-12-07 compared with 2023-09-06 · 385 added, 220 removed, 542 unchanged (53% of the section changed)

13 unchanged sentences

The BNC First Day discounted price is offered as a course fee or included in tuition.

During the first quarter ended July 29, 2023, BNC First Day total revenue increased by $16.7 million, or 37%, to $61.7 million compared to $45.1 million during the prior year period.

We expect to continue to introduce scalable and advanced solutions focused largely on the student and customer experience, expand our e-commerce capabilities and accelerate such capabilities through our merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc.

During the 26 weeks ended October 28, 2023, BNC First Day total revenue increased by $73 million, or 39%, to $261 million compared to $188 million during the prior year period.

We expect to continue to introduce scalable and advanced solutions focused largely on the student and customer experience, expand our e-commerce capabilities and accelerate such capabilities through our service providers, Fanatics Retail Group Fulfillment, LLC, Inc.

(“Fanatics”) and Fanatics Lids College, Inc.

D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L Partnership”), win new accounts, and expand our strategic opportunities through partnerships.

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.

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.

During the 13 weeks ended July 29, 2023, Retail Gross Comparable Store general merchandise sales increased by 5.3%.

D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L Relationship”), win new accounts, and expand our revenue opportunities through strategic relationships.

We expect gross general merchandise sales 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 Relationship.

As our service providers, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools from Fanatics and Lids on our behalf to drive increased value for customers and accelerate growth of our logo general merchandise business.

During the 26 weeks ended October 28, 2023, Retail Gross Comparable Store general merchandise sales increased by 1.1%.

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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Financing Arrangements

During the 13 weeks ended July 29, 2023, we amended our existing Credit Agreement and Term Loan Agreement to, extend the maturity dates and modify various terms to provide additional liquidity.

During the 13 and 26 weeks ended October 28, 2023, we amended our existing Credit Agreement and Term Loan Agreement to, extend the maturity dates and modify various terms to provide additional liquidity.

For additional information, see Item 1.

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On May 31, 2023, we completed the sale of these assets related to our DSS Segment for cash proceeds of $20 million, net of certain transaction fees, severance costs, escrow, and other considerations.

During the 13 weeks ended July 29, 2023, we recorded a Gain on Sale of Business of $3.1 million in Net Loss from Discontinued Operations related to the sale.

During the 26 weeks ended October 28, 2023, we recorded a Gain on Sale of Business of $3.1 million in Loss from Discontinued Operations, Net, related to the sale.

Net cash proceeds from the sale were used for debt repayment and provided additional funds for working capital needs under our Credit Facility.

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Cost Savings Initiative

We have implemented a significant cost reduction program designed to streamline our operations, maximize productivity and drive profitability.

We have taken steps to significantly reduce our workforce, eliminated duplicate administrative headcounts at all levels, implemented improved system development processes to reduce maintenance costs, reduced capital expenditures, and evaluated operating contractual obligations for cost savings.

We have achieved meaningful cost savings from this program of approximately $17 million d uring the second half of the year ended April 29, 2023.

These initiatives are expected to provide annualized savings of $30 million to $35 million in Fiscal 2024.

Management's plans over the next twelve months include the further reduction of gross capital expenditures and other cost saving measures of approximately $25 million.

Management believes that these plans are within its control and probable of being implemented on a timely basis.

During Fiscal 2023, we implemented a significant cost reduction program designed to streamline our operations, maximize productivity and drive profitability.

We reduced our workforce, eliminated duplicate administrative headcounts at all levels, implemented improved system development processes to reduce maintenance costs, reduced capital expenditures, and evaluated operating contractual obligations for cost savings.

Over the last year, we have achieved annualized savings of $30 million to $35 million from these cost savings initiatives.

Additionally, during Fiscal 2024, Management's planned to implement further cost savings measures, including reduction of gross capital expenditures, amounting to approximately $25 million, of which approximately $14 million has been achieved during the 26 weeks ended October 28, 2023.

Management believes that these plans are within its control and will be focused on implementing as outlined.

BNC First Day Equitable and Inclusive Access Programs

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The BNC First Day discounted price is offered as a course fee or included in tuition.

• First Day Complete is adopted by an institution and includes all undergraduate classes (and on occasion graduate classes), providing students both physical and digital materials.

• First Day Complete is adopted by an institution and includes the majority of undergraduate classes (and on occasion graduate classes), providing students both physical and digital materials.

The First Day Complete model drives substantially greater unit sales and sell-through for the bookstore.

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Offering course materials through our equitable and inclusive 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, as well as the opportunity to improve student outcomes, while, at the same time, increasing our market share, revenue and relative gross profits of course material 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.

These programs have allowed us to reverse historical long-term trends in course materials revenue declines, which have been observed at those schools where such programs have been adopted.

These programs have allowed us to reverse historical long-term trends in course materials revenue declines, which have been observed at those schools where such programs have been adopted, and improve predictability of our future results.

We are moving quickly and decisively to accelerate our First Day Complete strategy.

We plan to move many institutions to First Day Complete in Fiscal 2024 and the majority of our schools by Fiscal 2025, with continued relative adoption of this model thereafter.

In the Fall of 2023, 157 campus stores are utilizing First Day ® Complete representing enrollment of nearly 800,000 undergraduate and post graduate students (as reported by National Center for Education Statistics), an increase of approximately 46% compared to Fall of 2022.

During the 13 weeks ended July 29, 2023, First Day Complete sales increased by $9.1 million, or 55%, to $25.5 million as compared to $16.5 million in the prior year period.

During the 13 weeks ended July 29, 2023, First Day sales increased by $7.7 million, or 27%, to $36.3 million as compared to $28.6 million in the prior year period.

Partnership with Fanatics and Lids

In December 2020, we entered into the F/L Partnership.

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.

The following table summarizes our BNC First Day sales for the 13 and 26 weeks ended October 28, 2023 and October 29, 2022:

Dollars in millions 13 weeks ended 26 weeks ended

October 28, 2023 October 29, 2022 Var $ Var % October 28, 2023 October 29, 2022 Var $ Var %

First Day Complete Sales

$ 136.4 $ 90.0 $ 46.4 52% $ 161.9 $ 106.5 $ 55.4 52%

First Day Sales

$ 62.8 $ 53.3 $ 9.5 18% $ 99.1 $ 81.9 $ 17.2 21%

Total BNC First Day Sales

$ 199.2 $ 143.3 $ 55.9 39% $ 261.0 $ 188.4 $ 72.6 39%

First Day Complete Fall 2023 Fall 2022 Var # Var %

Number of campus stores 157 111 46 41%

Estimated enrollment (a)

800,000 545,000 255,000 47%

(a) Total undergraduate and graduate student enrollment as reported by National Center for Education Statistics (NCES)

Relationship with Fanatics and Lids

In December 2020, we entered into the F/L Relationship.

Under the related service provider agreements, 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.

On our behalf, 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.

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.

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Retail and Wholesale.

Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, are not allocated to any specific reporting segment and continue to be presented as “Corporate Services”.

Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, are not allocated to a specific reporting segment and continue to be presented as “Corporate Services”.

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.

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Our bookstores typically operate under agreements with the college, university, or K-12 schools to be the official bookstore and the exclusive seller of course materials and supplies, including physical and digital products.

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.

The majority of the physical campus bookstores have school-branded e-commerce websites which we operate independently or along with our merchant service providers, and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts.

The Retail Segment offers our BNC First Day ® equitable and inclusive access programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class at a discounted rate, as compared to the total retail price for the same course materials if purchased separately.

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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.

During the 13 weeks ended July 29, 2023, we opened 20 stores and closed 97 stores in the Retail Segment, with estimated net annual sales of $52 million as we pruned some under-performing, less profitable stores, satellite stores, and certain other contracts were awarded to competitors.

During the 26 weeks ended October 28, 2023, we opened 31 stores and closed 126 stores in the Retail Segment, with estimated net annual sales of $60 million as we pruned some under-performing, less profitable stores, satellite stores, and certain other contracts were awarded to competitors.

We plan to move many institutions to First Day Complete in Fiscal 2024 and the majority of our stores by Fiscal 2025, with continued relative adoption of this model thereafter.

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Revenue from the rental of physical textbooks is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer and is recognized as rental income in our condensed consolidated financial statements.

Depending on the product mix offered under the BNC First

Day offerings, revenue recognized is consistent with our policies for product, digital and rental sales, net of an anticipated opt-out or return provision.

Depending on the product mix offered under the BNC First Day offerings, revenue recognized is consistent with our policies for product, digital and rental sales, net of an anticipated opt-out or return provision.

Given the growth of BNC First Day programs, the timing of cash collection from our school partners may shift to periods subsequent to when the revenue is recognized.

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Trends, Competition and Other Business Conditions Affecting Our Business

The market for educational materials continues to undergo significant change.

The market for educational materials continues to undergo significant changes.

As tuition and other costs rise, colleges and universities face increasing pressure to attract and retain students and provide them with innovative, affordable educational content and tools that support their educational development.

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The growth of our business depends on our ability to attract new customers and to increase the level of engagement by our current customers.

We continue to see downward enrollment trends.

In the Fall of 2023, we observed increased enrollment trends.

Enrollment trends, specifically at community colleges, generally correlate with changes in the economy and unemployment factors, e.g., low unemployment tends to lead to low enrollment and higher unemployment rates tend to lead to higher enrollment trends, as students generally enroll to obtain skills that are in demand in the workforce.

Additionally, enrollment trends are impacted by the dip in the United States birth rate resulting in fewer students at the traditional 18-24 year-old college age.

Additionally, enrollment trends are impacted by the dip in the United States birth rate resulting in fewer students at the

traditional 18-24 year-old college age.

Online degree program enrollments continue to grow, even in the face of declining overall higher education enrollment.

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We are moving quickly and decisively to accelerate our First Day Complete strategy.

While we plan to move many institutions to First Day Complete in Fiscal 2024, and the majority of our schools by Fiscal 2025, we cannot guarantee that we will be able to achieve these plans within these timeframes or at all.

While we plan to

move many institutions to First Day Complete in Fiscal 2024, and the majority of our schools by Fiscal 2025, 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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Selling and administrative expenses also include long-term incentive plan compensation expense and general office expenses, such as merchandising, procurement, field support, and finance and accounting.

Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services as discussed in the Overview - Segments discussion above.

Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to a specific reporting segment and are recorded in Corporate Services as discussed in the Overview - Segments discussion above.

Results of Operations - Summary - Continuing Operations (a)

13 weeks ended (a)

Dollars in thousands July 29,

2023 July 30,

13 weeks ended 26 weeks ended

Dollars in thousands October 28,

2023 October 29,

2022 October 28,

2023 October 29,

Product sales and other (b)

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Total sales $ 610,379 $ 608,633 $ 874,540 $ 863,307

Net loss from continuing operations $ (49,971) $ (50,322)

Net income (loss) from continuing operations $ 24,854 $ 24,168 $ (25,117) $ (26,154)

Adjusted Earnings (non-GAAP) - Continuing Operations (c) $ 29,128 $ 24,428 $ (16,210) $ (25,493)

$ (45,338) $ (49,921)

Adjusted EBITDA by Segment (non-GAAP) - Continuing Operations (c)

3 unchanged sentences

Elimination 4,623 3,258 (825) (1,621)

Total Adjusted EBITDA (non-GAAP) $ (26,842) $ (34,310)

Total Adjusted EBITDA (non-GAAP) (c)

$ 50,281 $ 39,187 $ 23,439 $ 4,877

(a) During the fourth quarter of Fiscal 2023, assets related to our Digital Student Solutions ("DSS") Segment met the criteria for classification as Assets Held for Sale and Discontinued Operations.

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The following table sets forth, for the periods indicated, the percentage relationship that certain items bear to total sales:

13 weeks ended

2023 July 30,

13 weeks ended 26 weeks ended

2023 October 29,

2022 October 28,

2023 October 29,

Product sales and other 93.3 % 93.2 % 94.0 % 93.9 %

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Product and other cost of sales (a)

79.3 78.9 80.1 78.9

Rental cost of sales (a)

54.5 55.5 55.0 55.9

Total cost of sales 77.7 77.3 78.6 77.5

3 unchanged sentences

Restructuring and other charges 0.7 — 1.0 0.1

Operating loss from continuing operations (15.8) % (17.9) %

Operating income (loss) from continuing operations 5.8 % 4.7 % (0.6) % (2.0) %

(a) Represents the percentage these costs bear to the related sales, instead of total sales.

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On May 31, 2023, we completed the sale of these assets related to our DSS Segment for cash proceeds of $20 million, net of certain transaction fees, severance costs, escrow, and other considerations.

During the 13 weeks ended July 29, 2023, we recorded a Gain on Sale of Business of $3.1 million in Net Loss from Discontinued Operations related to the sale.

During the 26 weeks ended October 28, 2023, we recorded a Gain on Sale of Business of $3.1 million in Loss from Discontinued Operations, Net, related to the sale.

Net cash proceeds from the sale were used for debt repayment and to provide additional funds for working capital needs under our Credit Facility.

13 weeks ended

Dollars in thousands July 29, 2023

July 30, 2022

13 weeks ended 26 weeks ended

Dollars in thousands October 28,

2023 October 29,

2022 October 28,

2023 October 29,

Total sales $ — $ 8,465 $ 2,784 $ 17,649

Cost of sales (a)

— 1,772 76 3,472

Gross profit (a)

— 6,693 2,708 14,177

Selling and administrative expenses 643 8,131 2,924 16,277

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Loss from discontinued operations, net of tax $ (674) $ (2,024) $ (1,091) $ (4,409)

(a) Cost of sales and Gross margin for the DSS Segment includes amortization expense (non-cash) related to content development costs of $0 and $1.6 million for the 13 weeks ended July 29, 2023 and July 30, 2022, respectively.

(b) During the 13 weeks ended July 29, 2023, we recognized an impairment loss (non-cash) of $0.6 million (both pre-tax and after-tax), comprised of $0.1 million and $0.5 million of property and equipment and operating lease right-of-use assets, respectively, on the condensed consolidated statement of operations as part of discontinued operations.

(c) During the 13 weeks ended July 29, 2023, we recognized restructuring and other charges of $3.3 million comprised of severance and other employee termination costs.

Results of Operations - Continuing Operations - 13 weeks ended July 29, 2023 compared with the 13 weeks ended July 30, 2022

13 weeks ended July 29, 2023

(a) Cost of sales and Gross margin for the DSS Segment includes amortization expense (non-cash) related to content development costs of $0 and $1.6 million for the 13 weeks ended October 28, 2023 and October 29, 2022, respectively, and $0 and $3.2 million for the 26 weeks ended October 28, 2023 and October 29, 2022, respectively.

(b) During the 26 weeks ended October 28, 2023, we recognized an impairment loss (non-cash) of $0.6 million (both pre-tax and after-tax), comprised of $0.1 million and $0.5 million of property and equipment and operating lease right-of-use assets, respectively, on the condensed consolidated statement of operations as part of discontinued operations.

(c) During the 26 weeks ended October 28, 2023, we recognized restructuring and other charges of $3.3 million comprised of severance and other employee termination costs.

Results of Operations - Continuing Operations - 13 and 26 weeks ended October 28, 2023 compared with the 13 and 26 weeks ended October 29, 2022

13 weeks ended October 28, 2023

Dollars in thousands Retail Wholesale Corporate Services Eliminations Total

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Restructuring and other charges 29 — 4,245 — 4,274

Operating (loss) income $ (28,374) $ 603 $ (8,509) $ (5,448) $ (41,728)

13 weeks ended July 30, 2022

Operating income (loss) $ 39,407 $ 1,344 $ (9,542) $ 4,623 $ 35,832

13 weeks ended October 29, 2022

Dollars in thousands Retail Wholesale Corporate Services Eliminations Total

10 unchanged sentences

Restructuring and other charges — — 260 — 260

Operating income (loss) $ 30,547 $ 218 $ (5,352) $ 3,258 $ 28,671

26 weeks ended October 28, 2023

Dollars in thousands Retail Wholesale Corporate Services Eliminations Total

Product sales and other $ 792,604 $ 59,764 $ — $ (30,020) $ 822,348

Rental income 52,192 — — — 52,192

Total sales 844,796 59,764 — (30,020) 874,540

Cost of sales (exclusive of depreciation and amortization expense):

Product and other cost of sales 640,279 47,880 — (29,192) 658,967

Rental cost of sales 28,697 — — — 28,697

Total cost of sales 668,976 47,880 — (29,192) 687,664

Gross profit 175,820 11,884 — (828) 186,876

Selling and administrative expenses 146,355 6,880 10,205 (3) 163,437

Depreciation and amortization expense 17,877 2,531 20 — 20,428

Restructuring and other charges 555 526 7,826 — 8,907

Operating income (loss) $ 11,033 $ 1,947 $ (18,051) $ (825) $ (5,896)

26 weeks ended October 29, 2022

Dollars in thousands Retail Wholesale Corporate Services Eliminations Total

Product sales and other $ 782,871 $ 58,203 $ — $ (30,013) $ 811,061

Rental income 52,246 — — — 52,246

Total sales 835,117 58,203 — (30,013) 863,307

Cost of sales (exclusive of depreciation and amortization expense):

Product and other cost of sales 622,416 45,849 — (28,310) 639,955

Rental cost of sales 29,206 — — — 29,206

Total cost of sales 651,622 45,849 — (28,310) 669,161

Gross profit 183,495 12,354 — (1,703) 194,146

Selling and administrative expenses 169,090 7,998 12,289 (82) 189,295

Depreciation and amortization expense 18,398 2,719 35 — 21,152

Restructuring and other charges — — 635 — 635

Operating (loss) income $ (3,993) $ 1,637 $ (12,959) $ (1,621) $ (16,936)

The following table summarizes our sales for the 13 weeks ended July 29, 2023 and July 30, 2022:

13 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022 Var $ Var %

The following table summarizes our sales for the 13 and 26 weeks ended October 28, 2023 and October 29, 2022:

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 Var $ Var % October 28, 2023 October 29, 2022 Var $ Var %

Product sales and other $ 569,698 $ 567,299 $ 2,399 0.4% $ 822,348 $ 811,061 $ 11,287 1.4%

1 unchanged sentence

Total Sales $ 610,379 $ 608,633 $ 1,746 0.3% $ 874,540 $ 863,307 $ 11,233 1.3%

The sales increase during the 13 weeks ended July 29, 2023 is primarily related to higher course material sales, primarily at our First Day programs.

During the first quarter ended July 29, 2023, BNC First Day total revenue increased by $16.7 million, or 37%, to $61.7 million compared to $45.1 million during the prior year period.

The components of the variances for the 13 week periods are reflected in the table below.

Sales variances 13 weeks ended

Dollars in millions July 29, 2023

The sales increase during the 13 and 26 weeks ended October 28, 2023 is primarily related to higher course material sales, primarily at our BNC First Day programs.

See Retail discussion below.

The components of the sales variances for the 13 and 26 week periods are reflected in the table below.

Sales variances 13 weeks ended 26 weeks ended

Dollars in millions October 28, 2023 October 28, 2023

Retail Sales (a)

7 unchanged sentences

Eliminations (d)

$ 1.2 $ (0.1)

Total sales variance:

1 unchanged sentence

For Retail Gross Comparable Store Sales details, see below.

(b) Service revenue includes brand partnerships, shipping and handling, and revenue from other programs.

(b) Service revenue includes brand partnership marketing, shipping and handling, and revenue from other programs.

(c) Other includes inventory liquidation sales to third parties, marketplace sales and certain accounting adjusting items related to return reserves, and other deferred items.

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The following is a store count summary for physical stores and virtual stores.

13 weeks ended

July 29, 2023 July 30, 2022

13 weeks ended 26 weeks ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Number of Stores:

Physical Virtual Total Physical Virtual Total

Physical Virtual Total Physical Virtual Total Physical Virtual Total Physical Virtual Total

Beginning of period 726 563 1,289 793 613 1,406 774 592 1,366 805 622 1,427

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End of period 717 554 1,271 793 606 1,399 717 554 1,271 793 606 1,399

We plan to move many institutions to First Day Complete in Fiscal 2024 and the majority of our stores by Fiscal 2025, with continued relative adoption of this model thereafter.

1 unchanged sentence

We continued to experience higher sales related to our BNC First Day programs and higher general merchandise gross sales, especially for graduation products, logo products, and cafe and convenience products, as on campus traffic continues to grow compared to the prior year.

Sales were negatively impacted by lower enrollments, primarily at community colleges and by international students, and the continuation of remote and hybrid class offerings.

Retail sales increased by $9.0 million, or 3.8%, to $245.5 million during the 13 weeks ended July 29, 2023 from $236.5 million during the 13 weeks ended July 30, 2022.

• Product sales and other increased by $8.4 million, or 3.7%, to $233.9 million during the 13 weeks ended July 29, 2023 from $225.6 million during the 13 weeks ended July 30, 2022.

During the 13 weeks ended July 29, 2023, total course material product sales increased by $11.0 million, or 8.7%, to $138.5 million primarily due to the growth of our BNC First Day programs discussed below;

total general merchandise product net sales decreased by $0.1 million, or 0.2%, to

$88.7 million primarily due to lower commissions for logo general merchandise part of the F/L Partnership agreements, under which the commission rates adjusts as the relationship matured, offset by higher graduation product sales.

Effective August 1, 2023, the commission rates for logo general merchandise increases for an estimated one year period under the terms of the July 2023 Term Loan Credit Agreement amendment.

Retail Gross Comparable Store Sales for general merchandise increased by 5.3% as discussed below.

Service and other revenue decreased by $2.5 million, to $6.7 million primarily due to lower other income for non-return rental penalty fees.

• Revenue from both of our BNC First Day equitable and inclusive access programs increased by $16.7 million, or 37%, to $61.8 million during the 13 weeks ended July 29, 2023, as compared to $45.1 million during the 13 weeks ended July 30, 2022.

First Day sales increased by $7.7 million, or 27%, to $36.3 million during the 13 weeks ended July 29, 2023, as compared to $28.6 million during the 13 weeks ended July 30, 2022.

First Day Complete total sales increased by $9.0 million, or 55%, to $25.5 million during the 13 weeks ended July 29, 2023, as compared to $16.5 million during the 13 weeks ended July 30, 2022.

As of July 29, 2023, 157 campus stores are utilizing First Day Complete course materials delivery program for the 2023 Fall Term, representing approximately 800,000 in total undergraduate and post graduate student enrollment (as reported by National Center for Education Statistics), compared to 111 campus stores representing approximately 545,000 in total undergraduate student enrollment in the 2022 Fall Term.

• Total course material rental income increased by $0.6 million, or 5.5%, to $11.5 million during the 13 weeks ended July 29, 2023 from $10.9 million during the 13 weeks ended July 30, 2022 primarily due to increased rental textbook activity in our First Day Complete program and improved availability of used textbook inventory.

Retail sales increased by $0.7 million, or 0.1%, to $599.3 million during the 13 weeks ended October 28, 2023 from $598.6 million during the 13 weeks ended October 29, 2022.

• Product sales and other increased by $1.4 million, or 0.2%, to $558.7 million during the 13 weeks ended October 28, 2023 from $557.3 million during the 13 weeks ended October 29, 2022.

During the 13 weeks ended October 28, 2023, total course material product sales increased by $19.0 million, or 4.6%, to $435.4 million, compared to the prior year period, primarily due to the growth of our BNC First Day programs discussed below;

total general merchandise product net sales decreased by $17.6 million, or 14.4%, to $105.0 million, compared to the prior year period, primarily due lower commissions received for logo general merchandise part of the F/L Relationship-related agreements, under which the commission rates adjusts as the relationship matured, offset by higher graduation product sales.

Effective August 1, 2023, our commission rates received for logo general merchandise increases for an estimated one year period under the terms of the July 2023 Term Loan Credit Agreement amendment.

Retail Gross Comparable Store Sales for general merchandise decreased by 1.7% compared to the prior year period as discussed below.

Service and other revenue remained flat at $18.2 million compared to the prior year period.

• Total course material rental income decreased by $0.7 million, or 1.6%, to $40.7 million during the 13 weeks ended October 28, 2023 from $41.3 million during the 13 weeks ended October 29, 2022 primarily due to the increased shift to digital course materials.

• Revenue from both of our BNC First Day equitable and inclusive access programs increased during the 13 weeks ended October 28, 2023 compared to the prior year period as follows:

Dollars in millions 13 weeks ended

October 28, 2023 October 29, 2022 Var $ Var %

First Day Complete Sales

$ 136.4 $ 90.0 $ 46.4 52%

First Day Sales

$ 62.8 $ 53.3 $ 9.5 18%

Total BNC First Day Sales

$ 199.2 $ 143.3 $ 55.9 39%

Retail sales increased by $9.7 million, or 1.2%, to $844.8 million during the 26 weeks ended October 28, 2023 from $835.1 million during the 26 weeks ended October 29, 2022.

• Product sales and other increased by $9.7 million, or 1.2%, to $792.6 million during the 26 weeks ended October 28, 2023 from $782.9 million during the 26 weeks ended October 29, 2022.

During the 26 weeks ended October 28, 2023, total course material product sales increased by $26.6 million, or 4.9%, to $573.9 million, compared to the prior year period, primarily due to the growth of our BNC First Day programs discussed below;

total general merchandise product net sales decreased by $17.8 million, or 8.4%, to $193.7 million, compared to the prior year period, primarily due to lower commissions for logo general merchandise part of the F/L Relationship-related agreements, under which the commission rates adjusts as the relationship matured, offset by higher graduation product sales.

Effective August 1, 2023, our commission rates received for logo general merchandise increases for an estimated one year period under the terms of the July 2023 Term Loan Credit Agreement amendment.

Retail Gross Comparable Store Sales for general merchandise increased by 1.1% compared to the prior year period as discussed below.

Service and other revenue increased by $0.9 million to $25.0 million, compared to the prior year period, primarily due to improvements in marketplace sales and return reserves, partially by lower other income for non-return rental penalty fees.

• Total course material rental income remained flat at $52.2 million during both 26 weeks ended October 28, 2023 and October 29, 2022 primarily due to the increased shift to digital course materials.

• Revenue from both of our BNC First Day equitable and inclusive access programs increased during the 26 weeks ended October 28, 2023 compared to the prior year period as follows:

Dollars in millions 26 weeks ended

October 28, 2023 October 29, 2022 Var $ Var %

First Day Complete Sales

$ 161.9 $ 106.5 $ 55.4 52%

First Day Sales

$ 99.1 $ 81.9 $ 17.2 21%

Total BNC First Day Sales

$ 261.0 $ 188.4 $ 72.6 39%

First Day Complete Fall 2023 Fall 2022 Var # Var %

Number of campus stores 157 111 46 41%

Estimated enrollment (a)

800,000 545,000 255,000 47%

(a) Total undergraduate and post graduate student enrollment (as reported by National Center for Education Statistics).

Retail Gross Comparable Store Sales

7 unchanged sentences

The increase in course material sales was primarily due to the growth of BNC First Day equitable and inclusive access programs (as discussed above), partially offset by a shift to lower cost options and more affordable solutions, including digital offerings.

The increase in general merchandise sales was primarily due to higher sales related to graduation products and logo products, and cafe and convenience products.

Retail Gross Comparable Store Sales variances by category for the 13 week periods are as follows:

13 weeks ended

Dollars in millions July 29, 2023 July 30, 2022

The decrease in general merchandise sales during the 13 weeks ended October 28, 2023 are primarily related to lower logo product sales.

The increase in general merchandise sales during the 26 weeks ended October 28, 2023 was primarily due to higher sales related to graduation products and logo products, and cafe and convenience products.

Retail Gross Comparable Store Sales variances by category for the 13 and 26 week periods are as follows:

13 weeks ended 26 weeks ended

Dollars in millions October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Textbooks (Course Materials) $ 26.0 5.8 % $ (21.8) (4.6) % $ 35.2 6.0 % $ (19.5) (3.2) %

1 unchanged sentence

Total Retail Gross Comparable Store Sales $ 22.9 3.6 % $ (14.1) (2.2) % $ 38.8 4.3 % $ 19.7 2.3 %

Wholesale sales increased by $1.7 million, or 4.6% to $38.8 million during the 13 weeks ended July 29, 2023 from $37.1 million during the 13 weeks ended July 30, 2022.

Wholesale sales decreased by $0.2 million, or 0.7% to $20.9 million during the 13 weeks ended October 28, 2023 from $21.1 million during the 13 weeks ended October 29, 2022.

The decrease is primarily due to higher returns and allowances of $1.2 million, partially offset by higher gross sales of $1.0 million compared to the prior year period.

Wholesale sales increased by $1.6 million, or 2.7% to $59.8 million during the 26 weeks ended October 28, 2023 from $58.2 million during the 26 weeks ended October 29, 2022.

The increase is primarily due to higher gross sales of $6.2 million compared to the prior year period, partially offset by higher returns and allowances of $4.6 million.

Cost of Sales and Gross Margin

Our cost of sales increased as a percentage of sales to 80.8% during the 13 weeks ended July 29, 2023 compared to 78.0% during the 13 weeks ended July 30, 2022.

Our gross margin decreased by $5.4 million, or 9.6%, to $50.6 million, or 19.2% of sales, during the 13 weeks ended July 29, 2023 from $56.0 million, or 22.0% of sales during the 13 weeks ended July 30, 2022.

The following table summarizes the Retail cost of sales for the 13 weeks ended July 29, 2023 and July 30, 2022:

13 weeks ended

Dollars in thousands July 29, 2023 % of

Related Sales July 30, 2022 % of

Our cost of sales increased as a percentage of sales to 77.7% during the 13 weeks ended October 28, 2023 compared to 77.3% during the 13 weeks ended October 29, 2022.

Our gross margin decreased by $1.9 million, or 1.4%, to $136.2 million, or 22.3% of sales, during the 13 weeks ended October 28, 2023 from $138.1 million, or 22.7% of sales during the 13 weeks ended October 29, 2022.

Our cost of sales increased as a percentage of sales to 78.6% during the 26 weeks ended October 28, 2023 compared to 77.5% during the 26 weeks ended October 29, 2022.

Our gross margin decreased by $7.3 million, or 11.5%, to $186.9 million, or 21.4% of sales, during the 26 weeks ended October 28, 2023 from $194.1 million, or 22.5% of sales during the 26 weeks ended October 29, 2022.

The following table summarizes the Retail cost of sales for the 13 and 26 weeks ended October 28, 2023 and October 29, 2022:

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 % of

Related Sales October 29, 2022 % of

Related Sales October 28, 2023 % of

Related Sales October 29, 2022 % of

Related Sales

5 unchanged sentences

$ 473,807 79.1% $ 469,108 78.4% $ 668,976 79.2% $ 651,622 78.0%

The following table summarizes the Retail gross margin for the 13 weeks ended July 29, 2023 and July 30, 2022:

13 weeks ended

Dollars in thousands July 29, 2023 % of

Related Sales July 30, 2022 % of

The following table summarizes the Retail gross margin for the 13 and 26 weeks ended October 28, 2023 and October 29, 2022:

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 % of

Related Sales October 29, 2022 % of

Related Sales October 28, 2023 % of

Related Sales October 29, 2022 % of

Related Sales

4 unchanged sentences

$ 125,529 20.9% $ 129,502 21.6% $ 175,820 20.8% $ 183,495 22.0%

For the 13 weeks ended July 29, 2023, the Retail Product and other gross margin as a percentage of sales decreased as discussed below:

• For the 13 weeks ended July 29, 2023, Product and other gross margin decreased (250 basis points), driven primarily by lower margin rates for course materials (200 basis points) due to higher markdowns, including markdowns related to closed stores, and lower margin rates due to the shift to digital course materials;

and lower commissions for logo general merchandise (290 basis points) as part of the F/L Partnership agreements, under which the commission rates adjust as the relationship matures.

Effective August 1, 2023, the commission rates for logo general merchandise increases for an estimated one year period under the terms of the July 2023 Term Loan Credit Agreement amendment.

These decreases were partially offset by lower contract costs as a percentage of sales related to our college and university contracts (210 basis points) resulting from contract renewals, and a favorable sales mix (30 basis points) due to increased sales primarily for graduation products.

• For the 13 weeks ended July 29, 2023, the Retail Rental gross margin as a percentage of sales increased driven primarily by favorable rental mix due to improved availability of used textbook inventory, partially offset by higher rental margin rates.

The cost of sales and gross margin for Wholesale were $33.0 million, or 85.1% of sales, and $5.8 million, or 14.9% of sales, respectively, during the 13 weeks ended July 29, 2023.

The cost of sales and gross margin for Wholesale was $30.2 million or 81.4% of sales and $6.9 million or 18.6% of sales, respectively, during the 13 weeks ended July 30, 2022.

The gross margin rate decreased during the 13 weeks ended July 29, 2023 primarily due to higher product costs and an increase in the returns and allowances, partially offset by lower markdowns.

For the 13 and 26 weeks ended October 28, 2023, the Retail Product and other gross margin as a percentage of sales decreased as discussed below:

• For the 13 weeks ended October 28, 2023, Product and other gross margin as a percentage of sales decreased (70 basis points), driven primarily by lower margin rates for course materials (155 basis points) due to higher markdowns, including markdowns related to closed stores;

and lower general merchandise sales, primarily from closed stores, and an unfavorable sales mix (20 basis points) due to the shift to digital course materials.

These decreases in gross margin rate were partially offset by increased sales from higher margin First Day Complete course material sales, and lower contract costs as a percentage of sales related to our college and university contracts (100 basis points) as a result of the shift to digital and First Day models and lower performing school contracts not renewed.

• For the 26 weeks ended October 28, 2023, Product and other gross margin as a percentage of sales decreased (120 basis points), driven primarily by lower margin rates for course materials (195 basis points) due to higher markdowns, including markdowns related to closed stores, and lower general merchandise sales, primarily from closed stores, and an unfavorable sales mix (60 basis points) due to the shift to digital course materials.

These decreases in gross margin rate were partially offset by increased sales from higher margin First Day Complete course material sales, and lower contract costs as a percentage of sales related to our college and university contracts (130 basis points) as a result of the shift to digital and First Day models and lower performing school contracts not renewed.

As part of the F/L Relationship-related agreements, the commission rates adjust as the relationship matures.

Effective August 1, 2023, our commission rates received for logo general merchandise increases for an estimated one year period under the terms of the July 2023 Term Loan Credit Agreement amendment.

For the 13 and 26 weeks ended October 28, 2023, the Retail Rental gross margin as a percentage of sales increased driven primarily by favorable rental mix due to improved availability of used textbook inventory, partially offset by higher rental margin rates.

The cost of sales and gross margin for Wholesale were $14.9 million, or 71.0% of sales, and $6.1 million, or 29.0% of sales, respectively, during the 13 weeks ended October 28, 2023.

The cost of sales and gross margin for Wholesale was $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.

The gross margin rate increased during the 13 weeks ended October 28, 2023 primarily due to lower markdowns, lower product costs, and lower warehouse costs, partially offset by an increase in the returns and allowances.

The cost of sales and gross margin for Wholesale were $47.9 million, or 80.1% of sales, and $11.9 million, or 19.9% of sales, respectively, during the 26 weeks ended October 28, 2023.

The cost of sales and gross margin for Wholesale was $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.

The gross margin rate decreased during the 26 weeks ended October 28, 2023 primarily due to an increase in the returns and allowances and higher product costs, partially offset by lower markdowns.

Intercompany Eliminations

During the 13 weeks ended July 29, 2023 and July 30, 2022, our sales eliminations were $(20.1) million and $(18.9) million, respectively.

During the 13 weeks ended October 28, 2023 and October 29, 2022, our sales eliminations were $(9.9) million and $(11.1) million, respectively.

During the 26 weeks ended October 28, 2023 and October 29, 2022, our sales eliminations were $(30.0) million and $(30.0) 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.

During the 13 weeks ended July 29, 2023 and July 30, 2022, the cost of sales eliminations were $(14.6) million and $(14.0) million, respectively.

During the 13 weeks ended October 28, 2023 and October 29, 2022, the cost of sales eliminations were $(14.6) million and $(14.3) million, respectively.

During the 26 weeks ended October 28, 2023 and October 29, 2022, the cost of sales eliminations were $(29.2) million and $(28.3) million, respectively.

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.

During the 13 weeks ended July 29, 2023 and July 30, 2022, the gross margin eliminations were $(5.5) million and $(4.9) million, respectively.

During the 13 weeks ended October 28, 2023 and October 29, 2022, the gross margin eliminations were $4.6 million and $3.2 million, respectively.

During the 26 weeks ended October 28, 2023 and October 29, 2022, the gross margin eliminations were $(0.8) million and $(1.7) 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.

Selling and Administrative Expenses

13 weeks ended

Dollars in thousands July 29, 2023 % of

Sales July 30, 2022 % of

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 % of

Sales October 29, 2022 % of

Sales October 28, 2023 % of

Sales October 29, 2022 % of

Total Selling and Administrative Expenses

$ 85,961 14.1% $ 98,954 16.3% $ 163,437 18.7% $ 189,295 21.9%

During the 13 weeks ended July 29, 2023, selling and administrative expenses decreased by $12.9 million, or 14.2%, to $77.5 million from $90.3 million during the 13 weeks ended July 30, 2022.

During the 13 weeks ended October 28, 2023, selling and administrative expenses decreased by $13.0 million, or 13.1%, to $86.0 million from $99.0 million during the 13 weeks ended October 29, 2022.

During the 26 weeks ended October 28, 2023, selling and administrative expenses decreased by $25.9 million, or 13.7%, to $163.4 million from $189.3 million during the 26 weeks ended October 29, 2022.

The variances by segment are discussed below.

During the 13 weeks ended July 29, 2023, Retail selling and administrative expenses decreased by $9.8 million, or 12.4%, to $69.2 million from $79.0 million during the 13 weeks ended July 30, 2022.

This decrease was primarily due to cost savings initiatives comprised of a $6.0 million decrease in comparable store payroll expense, new/closed store payroll expense and related operating costs, a $1.6 million decrease in corporate payroll expense, infrastructure and product development costs, and a $2.2 million decrease in incentive plan compensation expense.

Wholesale selling and administrative expenses decreased by $0.7 million, or 18.0%, to $3.4 million from $4.1 million during the 13 weeks ended July 30, 2022.

The decrease was primarily due to cost savings initiatives comprised of lower payroll expense of $0.6 million and lower incentive plan compensation expense of $0.1 million.

During the 13 weeks ended October 28, 2023, Retail selling and administrative expenses decreased by $12.9 million, or 14.3%, to $77.2 million from $90.1 million during the 13 weeks ended October 29, 2022.

This decrease was primarily due to cost savings initiatives comprised of a $11.9 million decrease in comparable store payroll expense, new/closed store payroll expense and related operating costs, and a $4.1 million decrease in corporate payroll expense, infrastructure and product development costs, partially offset by a $3.1 million increase in incentive plan compensation expense due to the reversal of the incentive accrual in the prior year.

During the 26 weeks ended October 28, 2023, Retail selling and administrative expenses decreased by $22.7 million, or 13.4%, to $146.4 million from $169.1 million during the 26 weeks ended October 29, 2022.

This decrease was primarily due to cost savings initiatives comprised of a $17.9 million decrease in comparable store payroll expense, new/closed store payroll expense and related operating costs, and a $5.7 million decrease in corporate payroll expense, infrastructure and product development costs, partially offset by an $0.8 million increase in incentive plan compensation expense.

During the 13 weeks ended October 28, 2023, Wholesale selling and administrative expenses decreased by $0.4 million, or 9.7%, to $3.5 million from $3.9 million during the 13 weeks ended October 29, 2022.

The decrease was primarily due to cost savings initiatives comprised of lower payroll expense of $0.5 million, partially offset by higher operating expenses of $0.1 million.

During the 26 weeks ended October 28, 2023, Wholesale selling and administrative expenses decreased by $1.1 million, or 14.0%, to $6.9 million from $8.0 million during the 26 weeks ended October 29, 2022.

The decrease was primarily due to cost savings initiatives comprised of lower payroll expense of $1.1 million and lower incentive plan compensation expense of $0.1 million, partially offset by higher operating expenses of $0.1 million.

Corporate Services

During the 13 weeks ended July 29, 2023, Corporate Services' selling and administrative expenses decreased by $2.3 million, or 31.8%, to $4.9 million from $7.2 million during the 13 weeks ended July 30, 2022.

During the 13 weeks ended October 28, 2023, Corporate Services' selling and administrative expenses increased by $0.2 million, or 4.2%, to $5.3 million from $5.1 million during the 13 weeks ended October 29, 2022.

The increase in costs was primarily due to higher incentive plan compensation expense of $0.9 million due to the reversal of the incentive accrual in the prior year, partially offset by lower operating costs of $0.4 million and lower payroll expense of $0.3 million.

During the 26 weeks ended October 28, 2023, Corporate Services' selling and administrative expenses decreased by $2.1 million, or 17.0%, to $10.2 million from $12.3 million during the 26 weeks ended October 29, 2022.

The decrease in costs was primarily due to cost savings initiatives comprised of lower incentive plan compensation expense of $0.6 million, lower payroll expense of $0.8 million, and lower operating costs of $0.7 million.

Depreciation and Amortization Expense

13 weeks ended

Dollars in thousands July 29, 2023 % of

Sales July 30, 2022 % of

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 % of

Sales October 29, 2022 % of

Sales October 28, 2023 % of

Sales October 29, 2022 % of

Total Depreciation and Amortization Expense

$ 10,175 1.7% $ 10,256 1.7% $ 20,428 2.3% $ 21,152 2.5%

Depreciation and amortization expense decreased by $0.6 million, or 5.9%, to $10.3 million during the 13 weeks ended July 29, 2023 from $10.9 million during the 13 weeks ended July 30, 2022.

Depreciation and amortization expense decreased by $0.1 million, or 0.8%, to $10.2 million during the 13 weeks ended October 28, 2023 from $10.3 million during the 13 weeks ended October 29, 2022.

Depreciation and amortization expense decreased by $0.7 million, or 3.4%, to $20.4 million during the 26 weeks ended October 28, 2023 from $21.1 million during the 26 weeks ended October 29, 2022.

The decrease was primarily attributable to lower depreciable assets and intangibles due to the store impairment loss recognized during Fiscal 2023.

Restructuring and other charges

During the 13 weeks ended July 29, 2023, we recognized restructuring and other charges totaling $4.6 million, comprised primarily of $1.1 million for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost savings initiatives, and $3.5 million for costs primarily associated with professional service costs for restructuring and process improvements.

During the 13 weeks ended July 30, 2022, we recognized restructuring and other charges totaling $0.4 million, comprised primarily of costs primarily associated with professional service costs for restructuring and process improvements.

Operating Loss

13 weeks ended

Dollars in thousands July 29, 2023 % of

Sales July 30, 2022 % of

Total Operating Loss $ (41,728) (15.8)% $ (45,607) (17.9)%

Our operating loss was $(41.7) million during the 13 weeks ended July 29, 2023, compared to operating loss of $(45.6) million during the 13 weeks ended July 30, 2022.

During the 13 and 26 weeks ended October 28, 2023, we recognized restructuring and other charges totaling $4.3 million and $8.9 million, respectively, comprised primarily of $4.3 million and $7.8 million, respectively, for costs primarily associated with professional service costs for restructuring as discussed below and process improvements and $0 and $1.1 million, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost savings initiatives.

Pursuant to the July 28, 2023 Credit Agreement amendment, the Board established a committee consisting of three independent directors to explore, consider, solicit expressions of interest or proposals for, respond to any communications, inquiries or proposals regarding, and advise as to all strategic alternatives to effect a “Specified Liquidity Transaction” (as defined in the Credit Agreement).

Restructuring and other expenses associated with the costs of this committee, as well as other related professional service costs, are expected to decrease when the Company concludes on a strategic alternative.

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.

Operating Income (Loss)

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 % of

Sales October 29, 2022 % of

Sales October 28, 2023 % of

Sales October 29, 2022 % of

Total Operating Income (Loss) $ 35,832 5.8% $ 28,671 4.7% $ (5,896) (0.6)% $ (16,936) (2.0)%

Our operating income was $35.8 million during the 13 weeks ended October 28, 2023, compared to $28.7 million during the 13 weeks ended October 29, 2022.

The increase in operating income is due to the matters discussed above.

For the 13 weeks ended October 28, 2023, excluding the $4.3 million of restructuring and other charges, discussed above, operating income was

$40.1 million (or 6.6% of sales).

For the 13 weeks ended October 29, 2022, excluding the $0.3 million of restructuring and other charges, discussed above, operating income was $29.0 million (or 4.8% of sales).

Our operating loss was $(5.9) million during the 26 weeks ended October 28, 2023, compared to $(16.9) million during the 26 weeks ended October 29, 2022.

The decrease in operating loss is due to the matters discussed above.

13 weeks ended July 29, 2023, excluding the $4.6 million of restructuring and other charges, discussed above, operating loss was $(37.1) million (or (14.0)% of sales).

For the 13 weeks ended July 30, 2022, excluding the $0.4 million of restructuring and other charges, discussed above, operating loss was $(45.2) million (or (17.8)% of sales).

For the 26 weeks ended October 28, 2023, excluding the $8.9 million of restructuring and other charges, discussed above, operating income was $3.0 million (or 0.3% of sales).

For the 26 weeks ended October 29, 2022, excluding the $0.6 million of restructuring and other charges, discussed above, operating loss was $(16.3) million (or (1.9)% of sales).

Interest Expense, Net

13 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Interest Expense, Net $ 10,664 $ 4,886 $ 18,918 $ 8,754

Net interest expense increased by $4.4 million to $8.3 million during the 13 weeks ended July 29, 2023 from $3.9 million during the 13 weeks ended July 30, 2022.

The increase was primarily due to higher borrowings and higher interest rates compared to the prior year.

Net interest expense increased by $5.8 million to $10.7 million during the 13 weeks ended October 28, 2023 from $4.9 million during the 13 weeks ended October 29, 2022.

Net interest expense increased by $10.2 million to $18.9 million during the 26 weeks ended October 28, 2023 from $8.8 million during the 26 weeks ended October 29, 2022.

The increase was primarily due to higher borrowings and higher interest rates compared to the prior year period.

Income Tax (Benefit) Expense

13 weeks ended

Dollars in thousands July 29, 2023 Effective Rate July 30, 2022 Effective Rate

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 Effective Rate October 29, 2022 Effective Rate October 28, 2023 Effective Rate October 29, 2022 Effective Rate

Income Tax (Benefit) Expense

$ 314 1.2% $ (383) (1.6)% $ 303 (1.2)% $ 464 (1.8)%

We recorded an income tax benefit of $(0.01) million on pre-tax loss of $(50.0) million during the 13 weeks ended July 29, 2023, which represented an effective income tax rate of 0% and we recorded an income tax expense of $0.8 million on a pre-tax loss of $(49.5) million during the 13 weeks ended July 30, 2022, which represented an effective income tax rate of (1.7)%.

The effective tax rate for the 13 weeks ended July 29, 2023 is lower than the prior year comparable period due to the utilization of the discrete tax provision methodology in the current year.

We recorded an income tax expense of $0.3 million on pre-tax income of $25.2 million during the 13 weeks ended October 28, 2023, which represented an effective income tax rate of 1.2% and we recorded an income tax benefit of $(0.4) million on a pre-tax income of $23.8 million during the 13 weeks ended October 29, 2022, which represented an effective income tax rate of (1.6)%.

We recorded an income tax expense of $0.3 million on pre-tax loss of $(24.8) million during the 26 weeks ended October 28, 2023, which represented an effective income tax rate of (1.2)% and we recorded an income tax expense of $0.5 million on a pre-tax loss of $(25.7) million during the 26 weeks ended October 29, 2022, which represented an effective income tax rate of (1.8)%.

The effective tax rate for the 13 and 26 weeks ended October 28, 2023 is higher than the prior year comparable period due to the utilization of the discrete tax provision methodology in the current year.

For additional information, see Item 1.

1 unchanged sentence

Income Taxes.

Net Loss from Continuing Operations

13 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022

Net Loss from Continuing Operations $ (49,971) $ (50,322)

As a result of the factors discussed above, net loss from continuing operations was $(50.0) million during the 13 weeks ended July 29, 2023, compared with $(50.3) million during the 13 weeks ended July 30, 2022.

Adjusted Earnings (non-GAAP) is $(45.3) million during the 13 weeks ended July 29, 2023, compared with $(49.9) million during the 13 weeks ended July 30, 2022.

Net Income (Loss) from Continuing Operations

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Net Income (Loss) from Continuing Operations $ 24,854 $ 24,168 $ (25,117) $ (26,154)

As a result of the factors discussed above, net income from continuing operations was $24.9 million during the 13 weeks ended October 28, 2023, compared with $24.2 million during the 13 weeks ended October 29, 2022 and net loss from continuing operations was $(25.1) million during the 26 weeks ended October 28, 2023, compared with $(26.2) million during the 26 weeks ended October 29, 2022.

Adjusted Earnings (non-GAAP) is $29.1 million during the 13 weeks ended October 28, 2023, compared with $24.4 million during the 13 weeks ended October 29, 2022.

Adjusted Earnings (non-GAAP) is $(16.2) million during the 26 weeks ended October 28, 2023, compared with $(25.5) million during the 26 weeks ended October 29, 2022.

See Adjusted Earnings (non-GAAP) discussion below.

14 unchanged sentences

Management also uses Adjusted EBITDA by Segment to determine segment capital allocations.

We believe that the inclusion of Adjusted Earnings, Adjusted EBITDA, and Adjusted EBITDA by Segment results provides investors useful and important information regarding our operating results, in a manner that is consistent with management's evaluation of business performance.

We believe that the inclusion of Adjusted Earnings, Adjusted EBITDA, and Adjusted EBITDA by Segment provides investors useful and important information regarding our operating results, in a manner that is consistent with management's evaluation of business performance.

We believe that Free Cash Flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements and assists investors in their understanding of our operating profitability and liquidity as we manage the business to maximize margin and cash flow.

Consolidated Adjusted Earnings (non-GAAP) - Continuing Operations

13 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022

Net loss from continuing operations (a)

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Net income (loss) from continuing operations (a)

$ 24,854 $ 24,168 $ (25,117) $ (26,154)

Reconciling items (below)

4,274 260 8,907 661

Adjusted Earnings (non-GAAP) $ 29,128 $ 24,428 $ (16,210) $ (25,493)

1 unchanged sentence

Content amortization (non-cash)

$ — $ — $ — $ 26

Restructuring and other charges (b)

4,274 260 8,907 635

Reconciling items (c)

5 unchanged sentences

Consolidated Adjusted EBITDA (non-GAAP) - Continuing Operations

13 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022

Net loss from continuing operations (a)

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Net income (loss) from continuing operations (a)

$ 24,854 $ 24,168 $ (25,117) $ (26,154)

Depreciation and amortization expense 10,175 10,256 20,428 21,152

Interest expense, net 8,254 3,868

Income tax (benefit) expense

Content amortization (non-cash) (d)

Interest expense, net (b)

10,664 4,886 18,918 8,754

Income tax expense (benefit) 314 (383) 303 464

Content amortization (non-cash)

Restructuring and other charges (c)

4,274 260 8,907 635

Adjusted EBITDA (Non-GAAP) - Continuing Operations $ 50,281 $ 39,187 $ 23,439 $ 4,877

3 unchanged sentences

Net Loss from Continuing Operations excludes the results of operations related to the DSS Segment for all years reported above.

(b) See Management Discussion and Analysis and Results of Operations discussion above.

The following is Adjusted EBITDA by Segment for the 13 weeks ended July 29, 2023 and July 30, 2022.

Adjusted EBITDA - by Segment 13 weeks ended July 29, 2023

(b) Interest expense is reflected in Corporate Services as it is primarily related to our Credit Agreement and Term Loan Agreement which fund our operating and financing needs across the organization.

Income taxes are reflected in Corporate Services as we record our income tax provision on a consolidated basis.

The following is Adjusted EBITDA - Continuing Operations by Segment for the 13 and 26 weeks ended October 28, 2023 and October 29, 2022.

Adjusted EBITDA - by Segment 13 weeks ended October 28, 2023

Dollars in thousands Retail Wholesale Corporate Services (b)

Eliminations Total

Net (loss) income from continuing operations (a)

Net income (loss) from continuing operations (a)

$ 39,407 $ 1,344 $ (20,520) $ 4,623 $ 24,854

1 unchanged sentence

Interest expense, net — — 10,664 — 10,664

Income tax expense — — 314 — 314

Restructuring and other charges (c)

29 — 4,245 — 4,274

Adjusted EBITDA (non-GAAP) $ 48,347 $ 2,598 $ (5,287) $ 4,623 $ 50,281

Adjusted EBITDA - by Segment 13 weeks ended October 29, 2022

Dollars in thousands Retail Wholesale Corporate Services (b)

Eliminations Total

Net income (loss) from continuing operations (a)

$ 30,547 $ 218 $ (9,855) $ 3,258 $ 24,168

Depreciation and amortization expense 8,869 1,370 17 — 10,256

Interest expense, net — — 4,886 — 4,886

Income tax benefit — — (383) — (383)

Content amortization (non-cash) — — — — —

Restructuring and other charges (c)

— — 260 — 260

Adjusted EBITDA (non-GAAP) $ 39,416 $ 1,588 $ (5,075) $ 3,258 $ 39,187

Adjusted EBITDA - by Segment 26 weeks ended October 28, 2023

Dollars in thousands Retail Wholesale Corporate Services (b)

Eliminations Total

Net income (loss) from continuing operations (a)

$ 11,033 $ 1,947 $ (37,272) $ (825) $ (25,117)

Depreciation and amortization expense 17,877 2,531 20 — 20,428

Interest expense, net — — 18,918 — 18,918

Income tax expense — — 303 — 303

Restructuring and other charges (c)

1 unchanged sentence

Adjusted EBITDA (non-GAAP) $ 29,465 $ 5,004 $ (10,205) $ (825) $ 23,439

Adjusted EBITDA - by Segment 13 weeks ended July 30, 2022

Adjusted EBITDA - by Segment 26 weeks ended October 29, 2022

Dollars in thousands Retail Wholesale Corporate Services (b)

11 unchanged sentences

Net Loss from Continuing Operations excludes the results of operations related to the DSS Segment for all years reported above.

(b) See Management Discussion and Analysis and Results of Operations discussion above.

(c) Interest expense is reflected in Corporate Services as it is primarily related to our Credit Agreement and Term Loan Agreement which fund our operating and financing needs across the organization.

Income taxes are reflected in Corporate Services as we record our income tax provision on a consolidated basis.

Adjusted EBITDA (non-GAAP) - Discontinued Operations 13 weeks ended

July 29, 2023 July 30, 2022

Adjusted EBITDA (non-GAAP) - Discontinued Operations 13 weeks ended 26 weeks ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Loss from discontinued operations (a)

13 unchanged sentences

Free Cash Flow (non-GAAP)

13 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022

Net cash flows used in operating activities from continuing operations $ ( 119,858 ) $ ( 28,607 )

13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Net cash flows provided by (used in) operating activities from continuing operations $ 72,698 $ 38,680 $ ( 47,160 ) $ 10,073

Capital expenditures (a)

3,977 9,293 8,196 16,823

Cash interest 7,576 4,368 13,972 7,301

4 unchanged sentences

The following table provides the components of total purchases of property and equipment:

Capital Expenditures 13 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022

Capital Expenditures 13 weeks ended 26 weeks ended

Dollars in thousands October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Physical store capital expenditures $ 1,743 $ 6,052 $ 3,948 $ 10,548

10 unchanged sentences

Our liquidity is highly dependent on the seasonal nature of our business, particularly with respect to course material sales, as sales are generally highest in the second and third fiscal quarters, when college students generally purchase textbooks for the upcoming Fall and Spring semesters, respectively.

As of July 29, 2023, we had $19.3 million of cash on hand, including $10.7 million of restricted cash related to segregated funds for commission due to Fanatics for logo merchandise sales as per the merchandising partnership agreement.

As of October 28, 2023, we had $35.3 million of cash on hand, including $20.3 million of restricted cash related to segregated funds for commission due to Lids for logo merchandise sales as per the F/L Relationship-related agreements.

Our business was significantly negatively impacted by the COVID-19 pandemic during the years ended April 30, 2022 and May 1, 2021, as many schools adjusted their learning models and on-campus activities.

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The impact of COVID-19 store closings, as well as lower earnings during the year ended April 29, 2023, resulted in the loss of cash flows and increased borrowings that we would not otherwise have expected to incur.

We incurred a Net Loss from Continuing Operations of $(50.9) million and $(50.3) million for the 13 weeks ended July 29, 2023 and July 30, 2022, respectively, and we incurred a Net Loss from Continuing Operations of $(90.1) million , $(61.6) million , and $(133.6) million for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

Our Cash Flow Used In Operating Activities from Continuing Operations were $(119.9) million and $(28.6) million for the 13 weeks ended July 29, 2023 and July 30, 2022, respectively, and were $90.5 million , $(16.2) million , and $27.0 million , for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

The tightening of our available credit commitments, including the elimination and repayment of our seasonal borrowing facility (FILO Facility) of $40.0 million, has had a significant impact on our liquidity during the year ended April 29, 2023, including our ability to make timely vendor payments and school commission payments, resulting in a positive cash flow from operations offset by a use of cash for financing activities.

We recognized Net Income from Continuing Operations of $24.9 million and $24.2 million for the 13 weeks ended October 28, 2023 and October 29, 2022, respectively, and a Net Loss from Continuing Operations of $(25.1) million and $(26.2) million for the 26 weeks ended October 28, 2023 and October 29, 2022, respectively, and we incurred a Net Loss from Continuing Operations of $(90.1) million, $(61.6) million, and $(133.6) million for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

Our Cash Flow (Used In) Provided by Operating Activities from Continuing Operations were $(47.2) million and $10.1 million for the 26 weeks ended October 28, 2023 and October 29, 2022, respectively, and were $90.5 million, $(16.2) million, and $27.0 million, for the years ended April 29, 2023, April 30, 2022, and May 1, 2021, respectively.

The tightening of our available credit commitments, including the elimination and repayment of our FILO Facility in fiscal year 2023 of $40.0 million, had a significant impact on our liquidity during fiscal year 2023 and fiscal year 2024, including our ability to make timely vendor payments and school commission payments.

Our losses and projected cash needs, combined with our current liquidity level, raised substantial doubt about our ability to continue as a going concern as of the year ended April 29, 2023, which Management subsequently remediated by implementing a plan to improve the Company’s liquidity and successfully alleviate substantial doubt including (1) raising additional liquidity an d (2) taking additional operational restructuring actions.

7 unchanged sentences

We must pay a fee of $0.05 million to the lenders under the Term Loan Agreement on the earlier of September 2, 2024 and the Termination Date (as defined in the Term Loan Agreement).

On October 10, 2023, we amended our existing Credit Agreement to revise certain reporting requirements to the administrative agent and lenders under the Credit Agreement.

The amendment introduced a Specified Liquidity Transaction Fee of $3.8 million that would become due and payable at the earlier to occur of (1) January 31, 2024, to the extent a Specified Liquidity Transaction (as defined in the Credit Agreement) has not been consummated prior to such date (or such later date that is up to thirty days thereafter to the extent agreed to in writing by the Administrative Agent in its sole discretion) or (b) an Event of Default under the Credit Agreement.

Operational restructuring plans

We have implemented a significant cost reduction program designed to streamline our operations, maximize productivity and drive profitability.

We have achieved meaningful cost savings from this program of approximately $17.0 million d uring the second half of the year ended April 29, 2023.

These initiatives are expected to provide annualized savings of $30.0 million to $35.0 million in Fiscal 2024.

Management's plans over the next twelve months include the further reduction of gross capital expenditures and other cost saving measures of approximately $25.0 million.

Management believes that these plans are within its control and probable of being implemented on a timely basis.

During the 13 weeks ended July 29, 2023, Net Loss from Continuing Operations decreased by $0.3 million compared to the prior year period.

During the 13 weeks ended July 29, 2023, Net Loss from Continuing Operations, excluding interest expense and restructuring and other charges, improved by $9.0 million primarily due to operational improvements and cost

savings initiatives.

As discussed below, our first quarter is generally a low sales period, as the majority of sales and operating profit will be realized during the second and third quarters.

During Fiscal 2023, we implemented a significant cost reduction program designed to streamline our operations, maximize productivity and drive profitability.

Over the last year, we have achieved annualized savings of $30 million to

$35 million from these cost savings initiatives.

Management believes that these plans are within its control and will be focused on implementing as outlined.

During the 13 weeks ended October 28, 2023, Net Income from Continuing Operations increased by $0.7 million compared to the prior year period.

Excluding interest expense and restructuring and other charges Net Income from Continuing Operations improved by $10.5 million during the 13 weeks ended October 28, 2023 compared to the prior year period.

During the 26 weeks ended October 28, 2023, Net Loss from Continuing Operations decreased by $1.1 million compared to the prior year period.

Excluding interest expense and restructuring and other charges Net Loss from Continuing Operations decreased by $19.5 million during the 26 weeks ended October 28, 2023 compared to the prior year period.

The improvements in Net Income from Continuing Operations during the 13 and 26 weeks are primarily due to operational improvements and cost savings initiatives.

Management believes that the expected impact on our liquidity and cash flows resulting from the debt amendments and the operational initiatives outlined above are sufficient to enable the Company to meet its obligations for at least twelve months from the issuance date of these condensed consolidated financial statements and to continue to alleviate the conditions that initially raised substantial doubt about the Company's ability to continue as a going concern.

2 unchanged sentences

26 weeks ended

Dollars in thousands July 29, 2023 July 30, 2022

Net cash flows used in operating activities from continuing operations $ (119,858) $ (28,607)

Dollars in thousands October 28, 2023 October 29, 2022

Net cash flows (used in) provided by operating activities from continuing operations

$ (47,160) $ 10,073

Net cash flows used in investing activities from continuing operations (8,118) (16,568)

1 unchanged sentence

Net change in cash, cash equivalents, and restricted cash from continuing operations $ (14,103) $ 17,232

As of July 29, 2023 and July 30, 2022, we had restricted cash of $11.6 million and $7.5 million, respectively, comprised of $10.7 million and $6.6 million, respectively, in prepaid and other current assets in the condensed consolidated balance sheet related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids 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.

As of October 28, 2023 and October 29, 2022, we had restricted cash of $20.3 million and $15.6 million, respectively, comprised of $19.4 million and $14.7 million, respectively, in prepaid and other current assets in the condensed consolidated balance sheet related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider 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 from Continuing Operations

8 unchanged sentences

These shifts in timing may affect the comparability of our results across periods.

Cash flows used in operating activities from continuing operations during the 13 weeks ended July 29, 2023 were $(119.9) million compared to $(28.6) million during the 13 weeks ended July 30, 2022.

This increase in cash flows used in operating activities from continuing operations of $91.3 million was primarily due to timing of payables primarily due to delayed payments to vendors for inventory purchases and expenses, which were delayed resulting from lower borrowing base availability, increased accounts receivables primarily related to our increased adoption of our BNC First Day equitable and inclusive access sales for Summer terms;

and higher interest expense paid.

Cash flows used in operating activities from continuing operations during the 26 weeks ended October 28, 2023 were $(47.2) million compared to cash flows provided by operating activities of $10.1 million during the 26 weeks ended October 29, 2022.

This decrease in cash flows used in operating activities from continuing operations of $57.3 million was

primarily due to changes in working capital, including higher accounts receivables of $56.0 million and higher inventory levels of $34.6 million primarily related to our increased adoption of our BNC First Day equitable and inclusive access sales for Fall term;

higher payments for interest expense of $6.7 million;

offset by higher payables of $28.2 million due to delayed payments to vendors for inventory purchases and expenses, which were delayed resulting from lower borrowing base availability.

Cash Flow from Investing Activities from Continuing Operations

Cash flows used in investing activities from continuing operations during the 13 weeks ended July 29, 2023 were $(4.1) million compared to $(7.5) million during the 13 weeks ended July 30, 2022.

Cash flows used in investing activities from continuing operations during the 26 weeks ended October 28, 2023 were $(8.1) million compared to $(16.6) million during the 26 weeks ended October 29, 2022.

The decrease in cash used in investing activities is primarily due to lower capital expenditures and contractual capital investments, enhancements to internal systems and websites, and new store construction.

Capital expenditures totaled $4.2 million and $7.5 million during the 13 weeks ended July 29, 2023 and July 30, 2022, respectively.

Capital expenditures totaled $8.2 million and $16.8 million during the 26 weeks ended October 28, 2023 and October 29, 2022, respectively.

Cash Flow from Financing Activities from Continuing Operations

Cash flows provided by financing activities from continuing operations during the 13 weeks ended July 29, 2023 were $93.2 million compared to $33.4 million during the 13 weeks ended July 30, 2022.

This net change of $59.8 million is primarily due to higher net borrowings and higher payments for deferred financing costs.

Cash flows provided by financing activities from continuing operations during the 26 weeks ended October 28, 2023 were $41.2 million compared to $23.7 million during the 26 weeks ended October 29, 2022.

This net change of $17.4 million is primarily due to higher net borrowings of $24.4 million, partially offset by higher payments for deferred financing costs of $7.7 million.

Financing Arrangements

July 29, 2023 July 30, 2022

Credit Facility $ 249,735 $ 190,300

FILO Facility — 40,000

Term Loan 30,000 30,000

Maturity Date

October 28, 2023 October 29, 2022

Credit Facility December 28, 2024 $ 204,881 $ 222,000

Term Loan April 7, 2025 30,863 30,000

sub-total 235,744 252,000

6 unchanged sentences

Credit Facility

We have a credit agreement (the “Credit Agreement”), amended from time to time including on July 28,2023, May 24, 2023, March 8, 2023, March 31, 2021 and March 1, 2019, under which the lenders originally committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $400.0 million (the “Credit Facility”) effective from the March 1, 2019 amendment.

We have a credit agreement (the “Credit Agreement”), amended from time to time including on October 10, 2023, July 28, 2023, May 24, 2023, March 8, 2023, March 31, 2021 and March 1, 2019, under which the lenders originally committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $400.0 million (the “Credit Facility”) effective from the March 1, 2019 amendment.

We had the option to request an increase in commitments under the Credit Facility of up to $100.0 million, subject to certain restrictions.

4 unchanged sentences

On March 8, 2023, 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 $20.0 million to $380.0 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 (see discussion below) 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.

For additional information related to the Credit Agreement amendment, see the Company’s Report on Form 8-K dated March 8, 2023 and filed with the SEC on March 9, 2023.

For additional information related to

the Credit Agreement amendment, see the Company’s Report on Form 8-K dated March 8, 2023 and filed with the SEC on March 9, 2023.

As noted above, the amendment requires the achievement of a Special Event by no later than May 31, 2023 (as such date may be extended pursuant to the terms of the Credit Agreement).

13 unchanged sentences

We must pay (i) a fee of 0.50% of the outstanding principal amount of the commitments under the Credit Agreement March 2023 amendment (as defined in the Credit Agreement) on the closing date (in lieu of the deferred fee previously contemplated in connection with the March 2023 amendment (as defined in the Credit Agreement)) and (ii) a fee of 1.00% of the outstanding principal amount of the commitments under the Credit Agreement as of the closing date on the earlier to occur of September 2, 2024 and an Event of Default (as defined in the Credit Agreement).

During the 13 weeks ended July 29, 2023, we incurred debt issuance costs totaling $11.0 million related to the July 2023 Credit Agreement amendment.

For additional information related to the Credit Agreement amendment, see the Company's Report on Form 8-K filed with the SEC on July 28, 2023.

During the 26 weeks ended October 28, 2023, we incurred debt issuance costs totaling $11.5 million related to the July 2023 Credit Agreement amendment.

The debt issuance costs have been deferred and are presented as prepaid and other current assets and other noncurrent assets in the condensed consolidated balance sheets, and subsequently amortized ratably over the term of the credit agreement.

As of July 29, 2023, and through the date of this filing, we were in compliance with all debt covenants under the Credit Agreement.

October 2023 Credit Agreement Amendment

On October 10, 2023, we amended our existing Credit Agreement to amend certain reporting requirements to the administrative agent and lenders under the Credit Agreement.

is up to thirty days thereafter to the extent agreed to in writing by the Administrative Agent in its sole discretion) or (b) an Event of Default under the Credit Agreement.

During the 26 weeks ended October 28, 2023, we incurred debt issuance costs totaling $1.4 million related to the October 2023 Credit Agreement amendment.

As of October 28, 2023, and through the date of this filing, we were in compliance with all debt covenants under the Credit Agreement.

The Credit Facility is secured by substantially all of the inventory, accounts receivable and related assets of the borrowers under the Credit Facility.

This is considered an all asset lien (inclusive of proceeds from tax refunds payable to the Company and a pledge of equity from subsidiaries, exclusive of real estate).

During the 13 weeks ended July 29, 2023, we borrowed $145.2 million and repaid $49.6 million under the Credit Agreement, and had outstanding borrowings of $249.7 million as of July 29, 2023, comprised entirely of borrowings under the Credit Facility.

During the 13 weeks ended July 30, 2022, we borrowed $117.2 million and repaid $112.6 million under the Credit Agreement, and had outstanding borrowings of $230,300 as of July 30, 2022, comprised $190.3 million and $40.0 million of borrowings under the Credit Facility and FILO Facility, respectively.

As of July 29, 2023 and July 30, 2022, we have issued $0.6 million and $4.8 million, respectively, in letters of credit under the Credit Facility.

During the 26 weeks ended October 28, 2023, we borrowed $284.7 million and repaid $234.0 million under the Credit Agreement, and had outstanding borrowings of $204.9 million as of October 28, 2023, comprised entirely of borrowings under the Credit Facility.

During the 26 weeks ended October 29, 2022, we borrowed $318.2 million and repaid $321.9 million under the Credit Agreement, and had outstanding borrowings of $222.0 million as of October 29, 2022, comprised entirely of borrowings under the Credit Facility.

As of October 28, 2023 and October 29, 2022, we have issued $0.5 million and $4.8 million, respectively, in letters of credit under the Credit Facility.

On June 7, 2022, we entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with TopLids LendCo, LLC and Vital Fundco, LLC and we entered into an amendment to our existing Credit Agreement, which permitted us to incur the Term Loan Facility (as defined below).

For additional information, see the Company’s Report on Form 8-K dated June 7, 2022 and filed with the SEC on June 10, 2022.

The Term Loan Credit Agreement provides for term loans in an amount equal to $30.0 million (the “Term Loan Facility” and, the loans thereunder, the “Term Loans”) and matures on June 7, 2024.

The Term Loan Credit Agreement provides for term loans in an amount equal to $30.0 million (the “Term Loan Facility” and, the loans thereunder, the “Term Loans”) and matures on April 7, 2025.

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.

During the 13 weeks ended July 29,

2023, we borrowed $0 and repaid $0 under the Term Loan Credit Agreement, with $30.0 million of outstanding borrowings as of July 29, 2023.

During the 13 weeks ended July 30, 2022, we borrowed $30.0 million and repaid $0 under the Term Loan Credit Agreement.

During the 26 weeks ended October 28, 2023, we incurred $0.9 million for interest in kind on the Term Loan and repaid $0 under the Term Loan Credit Agreement, with $30.9 million of outstanding borrowings as of October 28, 2023.

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.

March 2023 Term Loan Credit Agreement Amendment

1 unchanged sentence

In addition, the amendment requires the achievement of a Specified Event (as described above) by no later than May 31, 2023 (as such date may be extended under the Credit Agreement, but no later than August 31, 2023 without consent from lenders under the Term Loan Credit Agreement).

For additional information, see the Company's Report on Form 8-K dated March 8, 2023 and filed with the SEC on March 9, 2023.

During the 52 weeks ended April 29, 2023, we incurred debt issuance costs totaling $0.4 million related to the March 2023 Term Loan Credit Agreement amendment.

4 unchanged sentences

We must pay a fee of $0.05 million to the lenders under the Term Loan Agreement on the earlier of September 2, 2024 and the Termination Date (as defined in the Term Loan Agreement).

During the 13 weeks ended July 29, 2023, we incurred debt issuance costs totaling $0.4 million related to the July 2023 Term Loan Credit Agreement amendment.

The debt issuance costs have been deferred and are presented as prepaid and other current assets and other noncurrent assets in the consolidated balance sheets, and subsequently amortized ratably over the term of the Term Loan Facility.

For additional information, see the Company's Report on Form 8-K filed with the SEC on July 28, 2023.

During the 26 weeks ended October 28, 2023, we incurred debt issuance costs totaling $0.4 million related to the July 2023 Term Loan Credit Agreement amendment.

The debt issuance costs have been deferred and are presented as a reduction to long-term borrowings in the consolidated balance sheets, and subsequently amortized ratably over the term of the Term Loan Facility.

The Term Loans accrue interest at a rate equal to 11.25%, payable quarterly.

To date, all interest on the term loan has been paid in cash.

All interest on the Term Loan prior to the July 29, 2023 was paid in cash.

During the 13 weeks ended October 28, 2023, all interest on the Term Loan was incurred in kind as permitted under the July 2023 Term Loan Amendment.

The Term Loans do not amortize prior to maturity.

2 unchanged sentences

The Credit Agreement amendment permitted us to incur the Term Loan Facility and also provides that, upon repayment of the Term Loan Credit Agreement (and, if applicable, any replacement credit facility thereof), we may incur second lien secured debt in an aggregate principal amount not to exceed $75.0 million.

Interest Expense

During the 13 weeks ended October 28, 2023 and October 29, 2022, we recognized interest expense of $10.7 million and $4.9 million, respectively, and during the 26 weeks ended October 28, 2023 and October 29, 2022, we recognized interest expense of $18.9 million and $8.8 million, respectively.

Cash interest paid during the 26 weeks ended October 28, 2023 and October 29, 2022 was $14.0 million and $7.3 million, respectively.

Income Tax Implications on Liquidity

1 unchanged sentence

As a result of the tax year-end change, there is no longer a long-term tax payable associated with the LIFO reserve in other long-term liabilities.

As of July 29, 2023, we recognized a current income tax receivable for net operating loss carrybacks in prepaid and other current assets on the condensed consolidated balance sheet.

As of October 28, 2023, we recognized a current income tax receivable for net operating loss carrybacks in prepaid and other current assets on the condensed consolidated balance sheet.

We received refunds of $7.8 million in Fiscal 2022 and a $15.8 million refund in Fiscal 2023.

1 unchanged sentence

Share Repurchases

During the 13 weeks ended July 29, 2023, we did not repurchase any of our Common Stock under the stock repurchase program.

As of July 29, 2023, approximately $26.7 million remains available under the stock repurchase program.

During the 13 weeks ended July 29, 2023, we repurchased 77,898 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

During the 13 and 26 weeks ended October 28, 2023, we did not repurchase any of our Common Stock under the stock repurchase program.

As of October 28, 2023, approximately $26.7 million remains available under the stock repurchase program.

During the 13 and 26 weeks ended October 28, 2023, we repurchased 66,852 and 144,750 of our Common Stock, respectively, 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

As of July 29, 2023, we have no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.

As of October 28, 2023, we have no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.

Critical Accounting Policies

16 unchanged sentences

• the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various strategic and restructuring initiatives, may not be fully realized or may take longer than expected;

• dependency on strategic partnerships, such as with VitalSource Technologies, Inc.

• dependency on strategic service provider relationships, such as with VitalSource Technologies, Inc.

and the Fanatics Retail Group Fulfillment, LLC, Inc.

(“Fanatics”) and Fanatics Lids College, Inc.

D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L Partnership”), and the potential for adverse operational and financial changes to these partnerships, may adversely impact our business;

D/B/A "Lids" (“Lids”) (collectively referred to herein as the “F/L Relationship”), and the potential for adverse operational and financial changes to these strategic service provider relationships, may adversely impact our business;

• non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings;

16 unchanged sentences

• disruption of or interference with third party web service providers and our own proprietary technology;

• risks associated with the impact that public health crises, epidemics, and pandemics, such as the COVID-19 pandemic, have on the overall demand for BNED products and services, our operations, the operations of our suppliers and other business partners, and the effectiveness of our response to these risks;

• risks associated with the impact that public health crises, epidemics, and pandemics, such as the COVID-19 pandemic, have on the overall demand for BNED products and services, our operations, the operations of our suppliers, service providers, and campus partners, and the effectiveness of our response to these risks;

• lingering impacts that public health crises may have on the ability of our suppliers to manufacture or source products, particularly from outside of the United States;

• changes in domestic and international laws or regulations, including U.S.

• changes in applicable domestic and international laws, rules or regulations, including, without limitation, U.S.

tax reform, changes in tax rates, laws and regulations, as well as related guidance;

• enactment of laws or changes in enforcement practices which may restrict or prohibit our use of texts, emails, interest based online advertising, or similar marketing and sales activities;

• changes in and enactment of applicable laws, rules or regulations or changes in enforcement practices including, without limitation, with regard to consumer data privacy rights, which may restrict or prohibit our use of consumer personal information for texts, emails, interest based online advertising, or similar marketing and sales activities;

• adverse results from litigation, governmental investigations, tax-related proceedings, or audits;

8 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis