What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-07-09 compared with 2025-12-23 · 186 added, 391 removed, 423 unchanged (58% of the section changed)

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Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April.

“Fiscal 2025” means the 53 weeks ended May 3, 2025, “Fiscal 2024” means the 52 weeks ended April 27, 2024.

The following should be read in conjunction with "Explanatory Note", "Disclosures Regarding Forward-Looking Statements" and our consolidated financial statements and notes thereto included in Item 15 of this Annual Report on Form 10-K (this “Form 10-K”).

Restatement of Previously Issued Consolidated Financial Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement of the Company’s previously issued consolidated financial statements and related disclosures as of and for the fiscal year ended April 27, 2024, contained in its previously filed Annual Report on Form 10-K.

The restatement is made to correct errors associated with the recording of cost of digital sales and leases associated with our store operating agreements.

Detailed restatements of the Company's consolidated financial statements for Fiscal 2024 are provided in Note 3.

Restatement of Previously Issued Audited Consolidated Financial Statements in the Notes to Consolidated Financial Statements of this Form 10-K.

The Company’s previously issued unaudited interim Consolidated Statements of Operations for the first fiscal quarter ended July 29, 2023, second fiscal quarter and six months ended October 28, 2023, third fiscal quarter and nine months ended January 27, 2024, fiscal first quarter ended July 27, 2024, fiscal second quarter and six months ended October 26, 2024, and the fiscal third quarter and nine months ended January 25, 2025, contained in its previously filed Quarterly Reports on Form 10-Q have also been restated due to these errors.

Detailed restatements of the Company's unaudited interim condensed consolidated financial statements are provided in Note 21.

Restatement of Quarterly Financial Information (Unaudited) in the Notes to Consolidated Financial Statements of this Form 10-K.

See Explanatory Note at the beginning of this Form 10-K for additional background on the restatement, the fiscal periods impacted, control considerations, and other information.

“Fiscal 2026” means the 52 weeks ended May 2, 2026, “Fiscal 2025” means the 53 weeks ended May 3, 2025.

The following should be read in conjunction with "Disclosures Regarding Forward-Looking Statements" and our consolidated financial statements and notes thereto included in Item 15 of this Annual Report on Form 10-K (this “Form 10-K”).

Description of Business

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We operate 1,116 physical and virtual bookstores, delivering essential educational content and general merchandise within a dynamic omnichannel retail environment .

The Barnes & Noble brand (licensed from our former parent) and our subsidiary brands, BNC and MBS , are important to our relationships with leading publishers who rely on us as one of their primary distribution channels.

For a detailed description of our business, products and services, strategic initiatives, key relationships, and competitive position, see “Business” in Part I, Item 1 of this Form 10-K.

BNC First Day ®

The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands.

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In Fiscal 2026, the growth of our BNC First Day ® programs offset the declines in a la carte courseware sales and closed store sales.

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

Many institutions adopted First Day Complete in Fiscal 2025, and we continue to scale the number of schools adopting First Day Complete.

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

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

We expect gross comparable store general merchandise sales to increase over the long term, as our product assortments

We continue to see strong institutional interest in First Day Complete and First Day programs, reflecting an ongoing shift by colleges and universities toward affordable access course material models that increase student participation and improve access to required course materials.

The following table summarizes our BNC First Day ® sales for the 52 weeks ended May 2, 2026 and the 53 weeks ended May 3, 2025:

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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.

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

The Barnes & Noble brand (licensed from our former parent) along with our subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States.

Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important to our relationship with leading publishers who rely on us as one of their primary distribution channels.

BNC First Day ® Affordable Access Course Material Programs

We provide product and service offerings designed to address the most pressing issues in higher education, including affordable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes.

We offer our BNC First Day ® affordable access course material programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class at below market rates, as compared to the total retail price for the same course materials if purchased separately (a la carte), and students are billed the below market rate directly by the institution as a course charge or included in tuition.

• First Day Complete is adopted by an institution and includes all or 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.

• First Day is adopted by a faculty member for a single course, and students receive primarily digital course materials through their school's learning management system ("LMS").

Offering course materials through our affordable access First Day Complete and First Day models is an 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 has been observed at those schools where such programs have been adopted, and improve predictability of our future results.

In Fiscal 2025, the growth of our BNC First Day ® programs offset the declines in a la carte courseware sales and closed store sales.

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

Many institutions adopted First Day Complete in Fiscal 2025, and we continue to scale the number of schools adopting First Day Complete.

The following table summarizes our BNC First Day ® sales for the 53 weeks ended May 3, 2025 and the 52 weeks ended April 27, 2024:

Dollars in millions 52 weeks ended 53 weeks ended

May 3, 2025 April 27, 2024 $ Increase

May 2, 2026 May 3, 2025 $ Increase

First Day Complete Sales

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(a) Total undergraduate and graduate student enrollment as reported by National Center for Education Statistics (NCES) as of January 6, 2026.

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Relationship with Fanatics and Lids

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

Fanatics operates as our service provider, including processing consumer personal information on our behalf, using their cutting-edge e-commerce and technology expertise to offer our campus store websites 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.

We maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores.

We also work closely with our campus partners to ensure that each campus store maintains unique aspects of in-store merchandising, including localized product assortments and specific styles and designs that reflect each campus’s brand.

We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites.

Lids manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores, and Lids owns the inventory it manages, relieving us of the obligation to finance inventory purchases from working capital.

We have strategic service provider relationships with Fanatics Retail Group Fulfillment, LLC (“Fanatics”) and Fanatics Lids College, Inc.

D/B/A “Lids” (together with Fanatics, the “F/L Relationship”), which provide e-commerce capabilities, product assortment expertise, and digital marketing tools to accelerate growth of our logo general merchandise business.

As the logo and emblematic general merchandise sales are fulfilled by Lids and Fanatics, we recognize commission revenue earned for these sales on a net basis in our consolidated financial statements.

For a full description of the F/L Relationship, see “Relationship with Fanatics and Lids” in Part I, Item 1, Business.

Financing Arrangements

On June 10, 2024, we completed various transactions (the “Transactions”), including an equity rights offering, private equity investment, Term Loan debt conversion, and Credit Facility refinancing, to substantially deleverage our Consolidated Balance Sheet.

These Transactions raised additional capital for repayment of indebtedness and provide additional flexibility for working capital needs, which will also allow us to strategically invest in innovation and continue to execute our strategic initiatives, including but not limited to the growth of our First Day Complete program.

Upon closing of the Transactions on June 10, 2024:

• We received gross proceeds of $95.0 million of new equity capital through a $50.0 million new private equity investment (the “Private Investment”) led by Immersion a $45.0 million equity rights offering (the "Rights Offering").

The Private Investment and the Rights Offering infused approximately $85.5 million of net cash proceeds after transaction costs, and resulted in Immersion obtaining a controlling interest in the Company.

• Our existing Term Loan lenders, TopLids and VitalSource, converted approximately $34.0 million of outstanding principal and accrued and unpaid interest into our Common Stock (the “Term Loan Debt Conversion”).

We recognized a loss on extinguishment of debt of $55.2 million in the Consolidated Statement of Operations in connection with the Term Loan Debt Conversion which represents the difference between the debt fair value and net carrying value, plus unamortized deferred financing costs related to the Term Loan.

As a result of the Term Loan Debt Conversion, the Term Loan and its related agreements were terminated.

• We refinanced our existing Credit Facility (the "Credit Facility Refinancing") providing access to a $325.0 million facility maturing in 2028.

The Credit Facility Refinancing has meaningfully enhanced our financial flexibility and reduced our annual interest expense.

On September 19, 2024, we entered into an at-the market ("ATM") sales agreement (the "September ATM Sales Agreement") with BTIG, LLC ("BTIG") under which we sold the maximum of $40.0 million of our Common Stock.

from time to time at a weighted-average price of $10.06 per share and received $39.2 million in proceeds, net of commissions.

BTIG, as the sales agent sold the shares based upon our instructions (including as to price, time or size limits or other customary parameters or conditions).

We paid BTIG a commission of 2% of the gross sales proceeds of the Common Stock sold under the September ATM Sales Agreement.

We were not obligated to make any sales of Common Stock under the September ATM Sales Agreement.

On December 20, 2024, we entered into an additional ATM sales agreement with BTIG (the "December ATM Sales Agreement"), under which we sold the maximum of $40.0 million of our Common Stock from time to time at a weighted-average price of $10.42 per share and received $39.2 million in proceeds, net of commissions.

BTIG, as the sales agent, sold the shares based upon our instructions (including as to price, time or size limits or other customary parameters or conditions).

We paid BTIG a commission of 2% of the gross sales proceeds of the Common Stock sold under the December ATM Sales Agreement.

We were not obligated to make any sales of Common Stock under the December ATM Sales Agreement.

Index to Form 10-K Index to FS

Cost Savings Initiative

We continually seek to streamline our operations, maximize productivity and drive profitability to achieve significant cost reductions.

Over the past few fiscal years, we have 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.

In addition, we continue to close under-performing stores, and evaluate opportunities to refinance our debt.

During Fiscal 2025 and Fiscal 2024, we achieved savings of approximately $22 million and $29 million, respectively from cost savings initiatives.

For a detailed description of these transactions, see “Financing Arrangements” in Part I, Item 1, Business and Note 10, Debt, in the Notes to Consolidated Financial Statements.

We identify our segments in accordance with the way our business is managed.

During the 26 weeks ended October 26, 2024, management determined that a realignment of the Company's operating and reporting segments was necessary to better reflect the operations of the organization.

With the appointment of a new Chief Executive Officer ("CEO") and the completion of milestone financing transactions in June 2024, we streamlined operations to focus on a centralized management structure to support company-wide procurement, marketing and selling, delivery and customer service.

Given the change in how the overall business is managed and how the current CEO (the current Chief Operating Decision Maker ("CODM")) assesses performance and allocates resources, we combined the operating results of the prior two segments, Retail and Wholesale, into one operating and reporting segment.

Prior period disclosures have been restated to reflect the change to one segment.

The current CEO (the current Chief Operating Decision Maker ("CODM")) assesses performance and allocates resources.

The Company currently operates as a single operating and reportable segment.

Our business is highly seasonal, particularly with respect to textbook sales and rentals, with the major portion of sales and operating profit realized during the second and third fiscal quarters when college students generally purchase and rent textbooks for the upcoming semesters and lowest in the first and fourth fiscal quarters.

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

Revenue Recognition

Product sales are recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers for products ordered through our websites and virtual bookstores.

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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.

Cash Collection Timing

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

When a school adopts our BNC First Day ® affordable access course material offerings, cash collection from the school generally occurs after the institution's drop/add dates, which is later in the working capital cycle, particularly in our third quarter given the timing of the Spring Term and our quarterly reporting period, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor.

As a higher percentage of our sales shift to BNC First Day ® affordable access course material program offerings, we are focused on efforts to better align the timing of our cash outflows to course material vendors and cash inflows from collections from schools.

As a higher percentage of our sales shift to BNC First Day ® affordable access course material program offerings, we are focused on efforts to better align the timing of our

Index to Form 10-K Index to FS

cash outflows to course material vendors and cash inflows from collections from schools.

As the concentration of digital product sales increases, revenue will be recognized earlier during the academic term as digital textbook revenue is recognized when the digital content is made available to the customer compared to:

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For a discussion of our trends and other factors affecting our business, see Part I - Item 1.

Business and Item 1A, Risk Factors.

Results of Operations

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The results of operations reflected in our consolidated financial statements are presented on a consolidated basis.

All material intercompany accounts and transactions have been eliminated in consolidation.

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All intercompany accounts and transactions have been eliminated in consolidation.

Our sales are primarily derived from the sale of course materials, which include new, used, rental and digital textbooks, and general merchandise, including emblematic apparel and gifts, trade books, computer products, school and dorm supplies, convenience and café items and graduation products.

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We also derive revenue from other sources, such as sales of inventory management, hardware and point-of-sale software, and other services.

Our cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.

Our cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, warehouse costs related to inventory management and order fulfillment, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.

Our selling and administrative expenses consist primarily of store payroll and store operating expenses.

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.

Results of Operations Summary - Continuing Operations (a)

For a detailed discussion of Fiscal 2025 and year-over-year comparison to Fiscal 2024, see Results of Operations - Continuing Operations - 53 weeks ended May 3, 2025, compared with the 52 weeks ended April 27, 2024, below.

Results of Operations Summary (a)

For a detailed discussion of Fiscal 2026 and year-over-year comparison to Fiscal 2025, see Results of Operations below.

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Dollars in thousands May 2, 2026 May 3, 2025

Product sales and other $ 1,564,365 $ 1,463,245

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$ 366,168 $ 337,804

Loss from continuing operations before income taxes $ (61,569) $ (74,161)

Net loss from continuing operations $ (65,825) $ (75,019)

Adjusted Net Loss (non-GAAP) - Continuing Operations (a)

$ (61,717) $ (45,064)

Adjusted EBITDA (non-GAAP) - Continuing Operations (a)

Total Adjusted EBITDA (non-GAAP)

Income (loss) before income taxes $ 20,672 $ (61,569)

Net income (loss) $ 16,872 $ (65,825)

Adjusted Net income (loss) (a)

$ 22,262 $ (61,717)

(a) Adjusted Net Loss -Continuing Operations and Adjusted EBITDA - Continuing Operations are non-GAAP financial measures.

Adjusted EBITDA (a)

Total Adjusted EBITDA $ 76,513 $ 59,390

(a) Adjusted Net income (loss) and Adjusted EBITDA are non-GAAP financial measures.

See Use of Non-GAAP Measures .

Index to Form 10-K Index to FS

Results of Operations - Discontinued Operations

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 and is no longer a reportable segment.

Certain assets and liabilities associated with the DSS Segment are presented in our Consolidated Balance Sheets as "Assets Held for Sale" and "Liabilities Held for Sale".

The results of operations related to the DSS Segment are included in the Consolidated Statements of Operations as "Loss from discontinued operations, net of tax." The cash flows of the DSS Segment are also presented separately in our Consolidated Statements of Cash Flows.

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 52 weeks ended April 27, 2024, we recorded a Gain on Sale of Business of $3.5 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.

52 weeks ended

Dollars in thousands April 27, 2024

Total sales $ 2,784

Cost of sales

Selling and administrative expenses 3,029

Depreciation and amortization 3

Gain on sale of business (3,545)

Impairment loss (non-cash) (a)

Other (income) expense (b)

Transaction costs 13

Operating loss (710)

Income tax expense 20

Loss from discontinued operations, net of tax $ (730)

(a) During the 52 weeks ended April 27, 2024, 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 Consolidated Statement of Operations as part of discontinued operations.

(b) During the 52 weeks ended April 27, 2024, we recognized restructuring and other charges of $3.3 million, comprised of severance and other employee termination costs, on the Consolidated Statement of Operations as part of discontinued operations.

Index to Form 10-K Index to FS

Results of Operations - Continuing Operations

- 53 weeks ended May 3, 2025, compared with the 52 weeks ended April 27, 2024

Results of Operations - 52 weeks ended May 2, 2026, compared with the 53 weeks ended May 3, 2025

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Dollars in thousands May 2, 2026 May 3, 2025

Product sales and other $ 1,564,365 $ 1,463,245

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Impairment loss

Other (income) expense (1,572) 19,409

Operating income (loss) from continuing operations

$ 15,924 $ (33,796)

Other (income) expense, net (4,281) (1,572)

Operating income $ 36,538 $ 15,924

Percentage of Total Sales:

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

May 2, 2026 May 3, 2025

Product sales and other 91.2 % 90.9 %

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Impairment loss

Other (income) expense

(0.1) % 1.2 %

Operating income (loss) from continuing operations

Other (income) expense, net

(0.2) % (0.1) %

Operating income 2.1 % 1.0 %

The following table summarizes our sales:

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024 $ Increase

Dollars in thousands May 2, 2026 May 3, 2025 $ Increase

Product sales and other $ 1,564,365 $ 1,463,245 $ 101,120 6.9%

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Total sales $ 1,714,770 $ 1,610,170 $ 104,600 6.5%

Our total sales increased by $43.0 million, or 2.7%, to $1,610.2 million during the 53 weeks ended May 3, 2025 from $1,567.1 million during the 52 weeks ended April 27, 2024 which is primarily related to improved comp store sales driven by growth in our BNC First Day ® programs and general merchandise sales, offset by declines in a la carte course material sales and lower sales as a result of closed stores.

The components of the sales variances for the 53 weeks ended versus 52-week

Our total sales increased by $104.6 million, or 6.5%, to $1,714.8 million during the 52 weeks ended May 2, 2026 from $1,610.2 million during the 53 weeks ended May 3, 2025 which is primarily related to improved comparable store sales driven by growth in our BNC First Day ® programs and new store sales, offset by declines in general merchandise sales, a la carte course material sales and lower sales as a result of closed stores.

The components of the sales variances are reflected in the table below:

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period are reflected in the table below.

Sales variances 52 weeks ended

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For Gross Comparable Store Sales details, see below.

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

(b) Other includes inventory liquidation sales to third parties, marketplace sales and other deferred items.

The following is a store count summary for physical stores.

May 3, 2025 April 27, 2024

May 2, 2026 May 3, 2025

Number of Stores:

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End of period 647 469 1,116 653 493 1,146

During the 53 weeks ended May 3, 2025, we opened 56 stores and closed 155 physical and virtual stores, with estimated net annual sales of $(53.5) million.

During the 52 weeks ended May 2, 2026, we opened 64 stores that contributed approximately $100.0 million of sales in Fiscal 2026, and closed 94 physical and virtual stores that had estimated net annual sales of $69.0 million.

The Company’s strategic initiative is to close under-performing and less profitable stores.

Generally, sales are impacted by revenue from net new/closed stores, conversion to BNC First Day ® programs, increased campus and eCommerce website traffic, and an increase in the number of on campus activities and events, such as graduations, athletic events, alumni events and prospective student campus tours.

Our total sales increased by $43.0 million, or 2.7%, to $1,610.2 million during the 53 weeks ended May 3, 2025 from $1,567.1 million during the 52 weeks ended April 27, 2024.

• Product sales and other increased by $32.8 million, or 2.3%, to $1,463.2 million during the 53 weeks ended May 3, 2025 from $1,430.5 million during the 52 weeks ended April 27, 2024.

• Product sales and other, which consists of sales of course material products, general merchandise and services and other revenue, increased by $101.1 million, or 6.9%, to $1,564.4 million during the 52 weeks ended May 2, 2026 from $1,463.2 million during the 53 weeks ended May 3, 2025.

◦ Course material product sales increased by $107.3 million, or 10.5%, to $1,128.8 million during the 52 weeks ended May 2, 2026, compared to $1,021.5 million in the prior year period.

The increase was primarily due to the growth of our BNC First Day ® programs, which increased by $119.9 million, or 25.3%, to $593.8 million, offset by a decline in a la carte courseware sales, including lower sales resulting from closed stores.

The increase was primarily due to the growth of our BNC First Day ® programs, which increased by $166.3 million, or 28.0%, to $760.1 million, and new store sales, offset by a decline in a la carte courseware sales and including lower sales resulting from closed stores.

Dollars in millions 52 weeks ended 53 weeks ended

May 3, 2025 April 27, 2024 $ Increase

May 2, 2026 May 3, 2025 $ Increase

First Day Complete Sales

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(a) Total undergraduate and graduate student enrollment as reported by National Center for Education Statistics (NCES) as of January 6, 2026.

◦ General merchandise product net sales increased by $2.8 million, or 0.8%, to $358.1 million, compared to $355.3 million in the prior year period, primarily due to higher graduation product and cafe and convenience product sales.

◦ Service and other revenue decreased by $9.1 million, or 10.5%, to $77.4 million, compared to $86.5 million in the prior year period, primarily due lower liquidation and marketplace sales.

Index to Form 10-K Index to FS

◦ General merchandise product net sales decreased by $8.8 million, or 2.4%, to $355.3 million, compared to $364.1 million in the prior year period, primarily due to closed stores, and lower cafe and convenience, trade, and supply product sales, offset by higher graduation product sales and higher emblematic product sales.

Gross Comparable Store Sales for general merchandise increased by $10.5 million, or 1.9%, compared to the prior year period as discussed below.

◦ Service and other revenue decreased by $7.9 million, or 8.4%, to $86.5 million, compared to $94.4 million in the prior year period, primarily due to higher other income for non-return rental penalty fees, offset by lower partnership marketing and marketplace sales.

• Rental income for course materials increased by $10.2 million, or 7.5%, to $146.9 million during the 53 weeks ended May 3, 2025 from $136.7 million during the 52 weeks ended April 27, 2024, primarily due to the growth of our BNC First Day ® programs, offset by closed stores and the shift to digital products.

• Rental income for course materials increased by $3.5 million, or 2.4%, to $150.4 million during the 52 weeks ended May 2, 2026 from $146.9 million during the 53 weeks ended May 3, 2025, primarily due to the growth of our BNC First Day ® programs, partially offset by closed stores and the shift to digital products.

Gross Comparable Store Sales

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As a result, our calculation of comparable store sales is not necessarily comparable to similarly titled measures reported by other companies and is intended only as supplemental information and is not a substitute for net sales presented in accordance with GAAP.

Gross Comparable Store Sales increased by $117.2 million or 7.5% during the 53 weeks ended May 3, 2025.

Gross Comparable Store Sales increased by $71.3 million or 4.4% during the 52 weeks ended May 2, 2026, primarily driven by an increase in Course Materials sales, partially offset by lower General Merchandise sales.

Course Materials sales increased by $82.3 million or 7.6% primarily due to the growth of BNC First Day® affordable access course material programs (as discussed above), offset by declines in a la carte courseware sales.

The increase in general merchandise sales are primarily related to higher graduation and supplies product sales and cafe and convenience product sales, with logo product sales remaining flat, offset by lower trade books.

Gross Comparable Store Sales variances by category for the 53 and 52 weeks ended May 3, 2025 and April 27, 2024 are as follows:

Dollars in millions 53 weeks ended 52 weeks ended

May 3, 2025 April 27, 2024

Gross Comparable Store Sales variances by category are as follows:

52 weeks ended 53 weeks ended

Dollars in millions May 2, 2026 May 3, 2025

Textbooks (Course Materials) $ 82.3 7.6% $ 106.7 10.6%

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Cost of Sales and Gross Margin

Our cost of sales increased as a percentage of sales to 79.0% during the 53 weeks ended May 3, 2025 compared to 78.0% during the 52 weeks ended April 27, 2024.

Our gross margin decreased by $7.1 million, or (2.1)%, to $337.8 million, or 21.0% of sales, during the 53 weeks ended May 3, 2025 from $344.9 million, or 22.0% of sales, during the 52 weeks ended April 27, 2024.

Index to Form 10-K Index to FS

The following table summarizes the cost of sales for the 53 and 52 weeks ended May 3, 2025 and April 27, 2024:

Our cost of sales decreased as a percentage of sales to 78.6% during the 52 weeks ended May 2, 2026 compared to 79.0% during the 53 weeks ended May 3, 2025.

Our gross margin increased by $28.4 million, or 8.4%, to $366.2 million, or 21.4% of sales, during the 52 weeks ended May 2, 2026 from $337.8 million, or 21.0% of sales, during the 53 weeks ended May 3, 2025.

The following table summarizes the cost of sales:

52 weeks ended 53 weeks ended

Dollars in thousands May 2, 2026 % of

Related Sales April 27, 2024 % of

Related Sales May 3, 2025 % of

Related Sales

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Total cost of sales $ 1,348,602 78.6% $ 1,272,366 79.0%

The following table summarizes the gross margin for the 53 and 52 weeks ended May 3, 2025 and April 27, 2024:

The following table summarizes the gross margin for the 52 and 53weeks ended May 2, 2026 and May 3, 2025:

52 weeks ended 53 weeks ended

Dollars in thousands May 2, 2026 % of

Related Sales April 27, 2024 % of

Related Sales May 3, 2025 % of

Related Sales

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Gross Margin $ 366,168 21.4% $ 337,804 21.0%

For the 53 weeks ended May 3, 2025, the gross margin as a percentage of sales decreased as discussed below:

• Product and other gross margin decreased (150 basis points), primarily due to lower margin rates (230 basis points) due to unfavorable non-logo general merchandise, unfavorable shrink reserve, and margin erosion from growth in publisher stock programs, offset by lower contract costs as a percentage of sales (80 basis points) related to our college and university contracts as a result of the shift to digital and First Day models.

• Rental gross margin as a percentage of sales increased (250 basis points), driven primarily by higher rental margin rates, higher markdowns, along with lower contract costs as a percentage of sales related to our college and university contracts as a result of the shift to digital, the adoption of our BNC First Day ® models.

Index to Form 10-K Index to FS

For the 52 weeks ended May 2, 2026, the gross margin as a percentage of sales increased as discussed below:

• Product and other gross margin increased 40 basis points from prior year, primarily due to lower contract costs as a percentage of sales related to our college and university contracts as a result of the shift to digital and First Day models, partially offset by unfavorable logo, general merchandise, liquidation and marketplace.

• Rental gross margin as a percentage of sales increased 1.1% from prior year, primarily reflecting lower contract costs as a percentage of sales associated with the continued expansion of our BNC First Day ® programs and increased participation in affordable access course material offerings.

Selling and Administrative Expenses

1 unchanged sentence

Dollars in thousands May 2, 2026 % of

Sales April 27, 2024 % of

Sales May 3, 2025 % of

Selling and administrative expenses $ 288,573 16.8% $ 283,800 17.6%

During the 53 weeks ended May 3, 2025, selling and administrative expenses decreased by $27.8 million, or 8.9%, to $283.8 million from $311.6 million during the 52 weeks ended April 27, 2024, as a result of our continued cost savings initiatives.

During the 52 weeks ended May 2, 2026, selling and administrative expenses as a percentage of sales decreased 80 basis points as compared to the 53 weeks ended May 3, 2026 as a result in continued cost containment efforts in addition to overall sales growth.

Depreciation and Amortization Expense

1 unchanged sentence

Dollars in thousands May 2, 2026 % of

Sales April 27, 2024 % of

Sales May 3, 2025 % of

Depreciation and amortization expense $ 32,754 1.9% $ 37,939 2.4%

Depreciation and amortization expense decreased by $2.6 million to $37.9 million during the 53 weeks ended May 3, 2025 from $40.6 million during the 52 weeks ended April 27, 2024.

Capital expenditures decreased by $1.7 million during the 53 weeks ended May 3, 2025 compared to the prior year period and depreciable assets and intangibles were lower due to the store impairment loss recognized during Fiscal 2025 and Fiscal 2024.

Impairment loss (non-cash)

Depreciation and amortization expense decreased by $5.2 million to $32.8 million during the 52 weeks ended May 2, 2026 from $37.9 million during the 53 weeks ended May 3, 2025 primarily due to lower depreciable assets and intangibles due store closures during Fiscal 2026.

Impairment Loss

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

During the 52 weeks ended May 2, 2026, we evaluated certain of our store-level long-lived assets for impairment.

Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $1.7 million (both pre-tax and after-tax), comprised of $0.3 million, $0.3 million, and $1.1 million of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the Consolidated Statement of Operations.

Index to Form 10-K Index to FS

During the 52 weeks ended April 27, 2024, we evaluated certain of our store-level long-lived assets for impairment.

Based on the results of the impairment tests, we recognized an impairment loss (non-cash) of $7.2 million (both pre-tax and after-tax), comprised of $0.4 million, $3.6 million, and $3.2 million of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the Consolidated Statement of Operations.

For additional information, see Item 1.

Financial Statements - Note 2.

Summary of Significant Accounting Policies and Note 7.

Based on the results of the impairment tests, we recognized an impairment loss of $12.6 million (both pre-tax and after-tax), comprised of $2.8 million, $6.0 million, and $3.8 million of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the Consolidated Statement of Operations.

During the 53 weeks ended May 3, 2025, we evaluated certain of our store-level long-lived assets for impairment.

Based on the results of the impairment tests, we recognized an impairment loss of $1.7 million (both pre-tax and after-tax), comprised of $0.3 million, $0.3 million, and $1.1 million of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the Consolidated Statement of Operations.

For additional information, see Part 1I - Item 8.

Financial Statements and Supplementary Data, Note 3, - Store Closures and Impairment of Long-Lived Assets and Note 8.

Fair Value Measurements .

Other (income) and expenses

During the 53 weeks ended May 3, 2025, we recognized other income totaling $1.6 million, comprised primarily of an $8.8 million gain related to the termination of liabilities related to a frozen retirement benefit plan (non-cash), primarily offset by $2.1 million related to severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction initiatives, $2.1 million for legal and advisory professional service costs primarily related to restructuring activities and other charges, of $2.0 million of severance primarily related to the resignation of our former Chief Executive Officer on June 11, 2024, $1.4 million of which is included in accrued liabilities in the Consolidated Balance Sheet as of May 3, 2025, and $1.1 million related to the settlement of a class action lawsuit and related legal fees.

Other (Income) and Expense, net

During the 52 weeks ended May 2, 2026, we recognized other income totaling $4.3 million.

During the fourth quarter of fiscal 2026, the Company recognized income of approximately $12.6 million related to the resolution of its participation interest purchase agreement associated with the Visa/Mastercard interchange litigation.

The income represents the recognition of previously deferred amounts upon settlement of the underlying litigation.

See Note 9, Participation Interest Purchase Agreement s for additional details.

This was offset by professional fees related to the Investigation cost of $7.3 million and other professional service fees of $1.0 million.

See Part II - Item 8.

- Financial Statements and Supplementary Data - Note 2.

Summary of Significant Accounting Policies.

Index to Form 10-K Index to FS

During the 53 weeks ended May 3, 2025, we recognized other expense totaling $1.6 million, comprised primarily of an $8.8 million gain related to the termination of liabilities related to a frozen retirement benefits plan, primarily offset by $2.1 million related to severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction initiatives, $2.1 million for legal and advisory professional service costs primarily related to restructuring activities and other charges of $2.0 million of severance primarily related to the resignation of our former Chief Executive Officer on June 11, 2024, $1.4 million of which is included in accrued liabilities in the Consolidated Balance Sheet as of May 3, 2025, and $1.1 million related to the settlement of a class action lawsuit and related legal fees.

We recognized an increase to additional paid in capital on the Consolidated Balance Sheet for the reimbursement of the former Chief Executive Officer severance from VitalSource (a principal stockholder) as part of the June 10, 2024 financing transactions.

During the 52 weeks ended April 27, 2024, we recognized other expense totaling $19.4 million, comprised primarily of $19.6 million, primarily for costs primarily associated with professional service costs for restructuring and process improvements (see next paragraph below) and $1.1 million for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, partially offset by a $1.3 million in an actuarial gain related to a frozen retirement benefit plan (non-cash).

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 include costs associated with the costs of this committee, as well as other related professional service costs.

On June 10, 2024, we completed the Transactions, including the Rights Offering, the Private Investment, the Term Loan Debt Conversion, and the Credit Facility Refinancing, to substantially deleverage our Consolidated Balance Sheet.

These transactions raised additional capital for repayment of indebtedness and provide additional flexibility for working capital needs.

Operating Income (Loss)

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Dollars in thousands May 2, 2026 % of

Sales April 27, 2024 % of

Sales May 3, 2025 % of

Operating income (loss) $ 36,538 2.1% $ 15,924 1.0%

Our operating income was $15.9 million during the 53 weeks ended May 3, 2025 compared to operating loss of $33.8 million during the 52 weeks ended April 27, 2024.

Our operating income was $36.5 million during the 52 weeks ended May 2, 2026 compared to operating income of $15.9 million during the 53 weeks ended May 3, 2025.

The improvements in operating results were due to the matters discussed above.

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There were no debt conversions in the comparable prior period.

Financial Statements - Note 6.

Equity and Earnings (Loss) Per Share and Note 9.

Index to Form 10-K Index to FS

See Part II - Item 8.

Financial Statements and Supplementary Data - Note 6.

Equity and Note 10.

Interest Expense, Net

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Dollars in thousands May 2, 2026 May 3, 2025

Interest expense, net $ 15,866 $ 22,260

Net interest expense decreased by $18.1 million to $22.3 million during the 53 weeks ended May 3, 2025 from $40.4 million during the 52 weeks ended April 27, 2024.

Interest expense decreased primarily due to lower borrowings, lower interest rates and an $8.0 million decrease in amortization of deferred financing costs.

Net interest expense decreased by $6.4 million to $15.9 million during the 52 weeks ended May 2, 2026 from $22.3 million during the 53 weeks ended May 3, 2025.

Interest expense decreased primarily due to lower borrowings, lower interest rates and a $1.5 million decrease in amortization of deferred financing costs.

The following table disaggregates interest expense for the 52-week period:

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Dollars in thousands May 2, 2026 May 3, 2025

Interest Incurred

8 unchanged sentences

Total Interest Expense $ 15,866 $ 22,260

Cash interest paid during the 53 weeks ended May 3, 2025 and the 52 weeks ended April 27, 2024 was $17.9 million and $24.9 million, respectively.

Cash interest paid during the 52 weeks ended May 2, 2026 and the 53 weeks ended May 3, 2025 was $12.5 million and $17.9 million, respectively.

Index to Form 10-K Index to FS

Income Tax Expense

52 weeks ended 52 weeks ended

Dollars in thousands May 3, 2025 Effective Rate April 27, 2024 Effective Rate

Dollars in thousands May 2, 2026 Effective Rate May 3, 2025 Effective Rate

Income tax expense $ 3,800 18.3% $ 4,256 (6.9)%

We recorded an income tax expense of $4.3 million on a pre-tax loss of $61.6 million during the 53 weeks ended May 3, 2025, which represented an effective income tax rate of 6.9% and an income tax expense of $0.9 million on a pre-tax loss of $74.2 million during the 52 weeks ended April 27, 2024, which represented an effective income tax rate of 1.2%.

The effective tax rate for the 53 weeks ended May 3, 2025, is higher than the prior year comparable period due to permanent differences related to the debt-to-equity conversion, attribute limitations due to IRC 382, and valuation allowance movement.

Net Loss from Continuing Operations

We recorded an income tax expense of $3.8 million on a pre-tax income of $20.7 million during the 52 weeks ended May 2, 2026, which represented an effective income tax rate of 18.3% and an income tax expense of $4.3 million on a pre-tax loss of $61.6 million during the 53 weeks ended May 3, 2025, which represented an effective income tax rate of (6.9%).

The effective tax rate for the 52 weeks ended May 2, 2026 is higher than the prior year comparable period due to permanent differences related to the debt-to-equity conversion in the prior year period.

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Net loss from continuing operations

$ (65,825) $ (75,019)

As a result of the factors discussed above, we reported a net loss from continuing operations of $65.8 million during the 53 weeks ended May 3, 2025, compared with a net loss of $75.0 million during the 52 weeks ended April 27, 2024.

Adjusted Net Loss (non-GAAP) - Continuing Operations is $61.7 million during the 53 weeks ended May 3, 2025, compared with a Adjusted Net Loss (non-GAAP) - Continuing Operations of $45.1 million during the 52 weeks ended April 27, 2024.

See Adjusted Net Loss (non-GAAP) .

Index to Form 10-K Index to FS

Use of Non-GAAP Measures - Adjusted Net Earnings (Loss), Adjusted EBITDA, and Adjusted Free Cash Flow

To supplement our results prepared in accordance with generally accepted accounting principles (“GAAP”), we present certain non-GAAP financial measures, including Adjusted Net Earnings (Loss), Adjusted EBITDA, and Adjusted Free Cash Flow.

Dollars in thousands May 2, 2026 May 3, 2025

Net income (loss) $ 16,872 $ (65,825)

As a result of the factors discussed above, we reported a net income of $16.9 million during the 52 weeks ended May 2, 2026, compared with a net loss of $(65.8) million during the 53 weeks ended May 3, 2025.

Adjusted Net income is $22.3 million during the 52 weeks ended May 2, 2026, compared with a Adjusted Net loss of $(61.7) million during the 53 weeks ended May 3, 2025.

See Adjusted Net income (loss) below.

Use of Non-GAAP Measures - Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Free Cash Flow

To supplement our results prepared in accordance with generally accepted accounting principles (“GAAP”), we present certain non-GAAP financial measures, including Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Free Cash Flow.

These measures are "non-GAAP financial measures" as defined in Regulation G of the Securities Exchange Act of 1934 and Item 10(e) of Regulation S-K.

We define Adjusted Net Earnings (Loss) as net income (loss) from continuing operations, the most directly comparable GAAP measure, adjusted for certain reconciling items that are subtracted from or added to net income (loss) from continuing operations.

We define Adjusted EBITDA as net income (loss) from continuing operations, the most directly comparable GAAP measure, plus (1) depreciation and amortization;

(2) interest expense (3) income taxes, and (4) as adjusted for non-cash or non-recurring items, and other adjustments permitted under our credit agreement.

We define Adjusted Free Cash Flow as cash flows from operating activities, the most directly comparable GAAP measure, less capital expenditures, cash interest and cash taxes.

We define Adjusted Net Income (Loss) as net income (loss), the most directly comparable GAAP measure, adjusted for certain reconciling items that are subtracted from or added to net income (loss).

We define Adjusted EBITDA as net income (loss), the most directly comparable GAAP measure, plus (1) depreciation and amortization;

(2) interest expense (3) income taxes;

and (4) as adjusted for non-cash or non-recurring items, and other adjustments permitted under our credit agreement.

We define Adjusted Free Cash Flow as net cash flows provided by (used in) operating activities, the most directly comparable GAAP measure, less capital expenditures, cash interest and cash taxes.

We consistently calculate these non-GAAP measures using the same methodology each period.

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We encourage investors to review our consolidated financial statements included elsewhere in this Form 10-K.

Reconciliations of Adjusted Net Earnings (Loss) to net income (loss) from continuing operations, Adjusted EBITDA to net income (loss) from continuing operations, and Adjusted EBITDA - Discontinued to net income (loss) from discontinuing operations, and Adjusted Free Cash flow to cash flow from operating activities, the most directly comparable financial measure presented in accordance with GAAP, set forth in the tables below.

Reconciliations of Adjusted Net Income (Loss) to net income (loss), Adjusted EBITDA to net income (loss), and Adjusted Free Cash flow to cash flow from operating activities, the most directly comparable financial measure presented in accordance with GAAP, set forth in the tables below.

All of the items included in the reconciliations below are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance.

2 unchanged sentences

For a discussion regarding the seasonality of our business, see Management's Discussion and Analysis - Seasonality discussion above.

Consolidated Adjusted Net Loss (non-GAAP) - Continuing Operations

Index to Form 10-K Index to FS

Adjusted Net Income (Loss)

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Net loss from continuing operations (a)

$ (65,825) $ (75,019)

Dollars in thousands May 2, 2026 May 3, 2025

Net Income (loss) $ 16,872 $ (65,825)

Reconciling items

Adjusted Net Loss (non-GAAP)

$ (61,717) $ (45,064)

Adjusted Net income (loss) $ 22,262 $ (61,717)

Reconciling items

Impairment loss

Impairment loss (b)

$ 12,584 $ 1,713

Stock-based compensation expense

Other (income) expense (b)

Professional services costs related to restructuring

Legal settlement and related legal fees

Other (income) expense, net

Participation interest purchase agreement settlement (12,625) —

Severance and cost reduction initiatives — 4,058

Legal settlement and related legal fees — 1,059

Settlement of obligations and actuarial gain related to frozen retirement plan — (8,780)

(8,780) (1,339)

Other professional services fees 1,048 2,091

Estimated tax effect on reconciling items above (c)

Estimated tax effect on reconciling items above (a)

(1,831) (1,419)

Reconciling items

$ 5,390 $ 4,108

Index to Form 10-K Index to FS

Consolidated Adjusted EBITDA (non-GAAP) - Continuing Operations

(a) The tax effect on reconciling items was calculated for Fiscal 2026 using the statutory rate of 25.36%.

The tax effect on reconciling items was calculated for Fiscal 2025 using the statutory rate of 25.67%.

Adjusted EBITDA

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Net loss from continuing operations (a)

$ (65,825) $ (75,019)

Dollars in thousands May 2, 2026 May 3, 2025

Net income (loss) $ 16,872 $ (65,825)

Depreciation and amortization expense 32,754 37,939

1 unchanged sentence

Income tax expense 3,800 4,256

Impairment loss (b)

Impairment loss (a)

Loss on extinguishment of debt — 55,233

Other (income) expense (b)

Other (income) expense, net (a) (b)

(11,577) (1,572)

Stock-based compensation expense (non-cash)

Adjusted EBITDA (Non-GAAP) - Continuing Operations $ 59,390 $ 36,719

Adjusted EBITDA (Non-GAAP) - Discontinued Operations $ — $ (486)

Adjusted EBITDA (Non-GAAP) - Total $ 59,390 $ 36,233

(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.

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

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

For Fiscal 24, due to losses generated and use of the valuation allowance, the rate applied was 0%.

Adjusted EBITDA (non-GAAP) - Discontinued Operations 52 weeks ended

April 27, 2024

Loss from discontinued operations

Depreciation and amortization expense 3

Income tax expense 20

Stock-based compensation expense (non-cash)

Gain on sale of business (3,545)

Impairment loss (non-cash) 610

Other expense

Transaction costs 13

Adjusted EBITDA (Non-GAAP) - Discontinued Operations $ (486)

Adjusted Free Cash Flow (non-GAAP) - Continuing Operations

Stock-based compensation expense 6,214 5,386

Adjusted EBITDA $ 76,513 $ 59,390

(a) See Management's Discussion and Analysis - Results of Operations .

(b) Other (income) expense is exclusive of Investigation costs of $7.3 million incurred during the 52 weeks ended May 2, 2026.

Adjusted Free Cash Flow

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

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

Dollars in thousands May 2, 2026 May 3, 2025

Net cash flows provided by (used in) operating activities (a)

$ 50,057 $ (85,413)

2 unchanged sentences

Cash interest 12,531 17,912

Cash taxes (refund) paid 2,130 (7,293)

Adjusted Free Cash Flow (non-GAAP)

$ (118,349) $ (33,265)

Cash taxes (refund) paid, net 7,917 2,130

Adjusted Free Cash Flow $ 13,413 $ (118,349)

(a) See Liquidity and Capital Resources - Sources and Uses of Cash Flow discussion below.

8 unchanged sentences

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Dollars in thousands May 2, 2026 May 3, 2025

Physical store capital expenditures $ 10,527 $ 8,866

5 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 purchase textbooks for the upcoming Fall and Spring semesters, respectively.

As of May 3, 2025, we had $9.1 million of cash on hand and $19.7 million of restricted cash including $17.3 million related to segregated funds for commission due to Lids for logo merchandise sales as per the F/L Relationship-related agreements.

As of May 2, 2026, we had $8.4 million of cash on hand and $19.8 million of restricted cash including $17.4 million related to segregated funds for commission due to Lids for logo merchandise sales as per the F/L Relationship-related agreements and $2.4 million related amounts held in trust for future distributions related to employee benefit plans.

2 unchanged sentences

Additionally, on September 19, 2024 and December 20, 2024, respectively, we entered into an at-the market ("ATM") sales agreement with BTIG, LLC ("BTIG") under which we sold our Common Stock from time to time through BTIG as the sales agent ( See Note 6.

Equity and Earnings (Loss) Per Share ).

We believe that our future cash from operations, access to borrowings under the credit facility, and short-term vendor financing will provide adequate resources to fund our operating and financing needs for the next twelve months and beyond.

2 unchanged sentences

There can be no assurances that we will have access to capital markets on acceptable terms.

Sources and Uses of Cash Flow - Continuing Operations

Sources and Uses of Cash Flow

52 weeks ended 53 weeks ended

Dollars in thousands May 3, 2025 April 27, 2024

Net cash flows used in operating activities from continuing operations

$ (85,413) $ (1,545)

Net cash flows used in investing activities from continuing operations (12,101) (13,992)

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

97,667 (5,699)

Net change in cash, cash equivalents, and restricted cash from continuing operations $ 153 $ (21,236)

As of May 3, 2025, and April 27, 2024, we had cash of $9.1 million and $10.5 million, respectively.

As of May 3, 2025 and April 27, 2024, we had restricted cash of $19.7 million and $18.1 million, respectively, comprised of $17.3 million and $17.1 million, respectively, in prepaid and other current assets in the Consolidated Balance Sheets primarily related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising

Dollars in thousands May 2, 2026 May 3, 2025

Net cash flows provided by (used in) operating activities $ 50,057 $ (85,413)

Net cash flows used in investing activities (16,196) (12,101)

Net cash flows (used in) provided by financing activities (34,365) 97,667

Net change in cash, cash equivalents, and restricted cash $ (504) $ 153

As of May 2, 2026, and May 3, 2025, we had cash of $8.4 million and $9.1 million, respectively.

As of May 2, 2026 and May 3, 2025, we had restricted cash of $19.8 million and $19.7 million, respectively, comprised of $17.4 million and $17.3 million, respectively, in prepaid and other current assets in the Consolidated Balance Sheets primarily related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising agreement and

Index to Form 10-K Index to FS

agreement and $2.3 million and $1.0 million, respectively, in other noncurrent assets in the Consolidated Balance Sheets related to amounts held in trust for future distributions related to employee benefit plans.

Cash Flow from Operating Activities from Continuing Operations

$2.4 million and $2.3 million, respectively, in other noncurrent assets in the Consolidated Balance Sheets related to amounts held in trust for future distributions related to employee benefit plans.

Cash Flow from Operating Activities

Our business is highly seasonal.

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

Cash flows used in operating activities from continuing operations during the 53 weeks ended May 3, 2025, were $85.4 million compared to cash flows used in operating activities from continuing operations of $1.5 million during the 52 weeks ended April 27, 2024.

The increase in cash flows used in operating activities from continuing operations of $83.9 million was primarily due to the timing of payables $(206.6) million to vendors for inventory purchases and expenses, lower accounts receivables collections $7.1 million compared to the prior year, and reduction of inventory balances of $44.5 million, offset by lower payments for interest expense $(7.0) million and higher earnings $9.9 million.

Cash Flow from Investing Activities from Continuing Operations

Cash flows used in investing activities from continuing operations during the 53 weeks ended May 3, 2025, were $12.1 million compared to $14.0 million during the 52 weeks ended April 27, 2024.

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

Capital expenditures totaled $12.9 million and $14.1 million during the 53 weeks ended May 3, 2025, and the 52 weeks ended April 27, 2024, respectively.

Cash Flow from Financing Activities from Continuing Operations

Cash flows provided by (used in) financing activities from continuing operations during the 53 weeks ended May 3, 2025, were $97.7 million compared to $(5.7) million used in during the 52 weeks ended April 27, 2024.

The net change of $103.4 million is primarily due the gross proceeds of $95.0 million of new equity capital through a $50.0 million new equity investment led by Immersion Corporation, and a $45.0 million fully backstopped Rights Offering, and proceeds of $78.5 million from the sale of Common Stock, offset by payments for equity issuance costs of $9.9 million and lower net borrowings of $72.7 million.

Net cash provided by operating activities during the 52 weeks ended May 2, 2026, was $50.1 million compared with net cash used in operating activities of $85.4 million during the 53 weeks ended May 3, 2025.

The $135.5 million improvement in operating cash flows was primarily driven by favorable changes in working capital and improved operating performance, including a $184.0 million favorable change in accounts payable and accrued liabilities, primarily reflecting the timing of payments to vendors for inventory purchases and operating expenses, as well as an $82.7 million improvement in earnings.

These favorable impacts were partially offset by $(19.2) million unfavorable change in accounts receivable and a $(43.3) million reduction in the cash flow benefit associated with merchandise inventory balances compared with the prior year.

Cash Flow from Investing Activities

Net cash used in investing activities during the 52 weeks ended May 2, 2026, was $16.2 million compared to $12.1 million during the 53 weeks ended May 3, 2025.

The increase in cash used was primarily attributable to higher capital expenditures, reflecting continued investments in technology, store operations and strategic initiatives.

Cash Flow from Financing Activities

Net cash used in financing activities during the 52 weeks ended May 2, 2026, was $(34.4) million compared to net cash provided by financing activities of $97.7 million during the 53 weeks ended May 3, 2025.

The net change of $(132.0) million was primarily due to the absence of significant equity financing transactions completed during fiscal 2025, including $50.0 million private equity investment led by Immersion Corporation, and a $45.0 million fully backstopped Rights Offering, and proceeds of $78.5 million proceeds from the Company's at-the-market equity program.

In addition, borrowings under the Company's credit facilities were lower in fiscal 2026, resulting in net repayment of debt of $29.8 million.

Financing Arrangements

1 unchanged sentence

Maturity Date (a)

May 3, 2025 April 27, 2024

May 2, 2026 May 3, 2025

Credit Facility June 9, 2028 $ 71,000 $ 103,100

Term Loan April 7, 2025 — 32,653

103,100 197,600

Deferred financing costs, Term Loan (b)

Total debt $ 71,000 $ 103,100

3 unchanged sentences

For additional information, see Note 10.

(b) For additional information on deferred financing costs, see Deferred Financing Costs below.

Index to Form 10-K Index to FS

7 unchanged sentences

On June 10, 2024 (the “Closing Date”), we amended and restated the Credit Agreement, and through such amendment and restatement, further extended the maturity of our asset-based credit facility under the Credit Agreement (such amended and restated Credit Agreement, the “A&R Credit Agreement”).

Pursuant to the A&R Credit Agreement, the lenders thereunder have committed to provide a four-year asset-backed revolving credit facility (the "Credit Facility") in an aggregate committed principal amount of up to $325.0 million and extended the maturity date of the Credit Facility to June 9, 2028.

During the 53 weeks ended May 3, 2025, we incurred debt issuance costs totaling $3.7 million related to the A&R Credit Agreement amendment.

For information regarding the Credit Agreement amendments, deferred financing costs and terms, see Part II - Item 8.

Financial Statements and Supplementary Data - Note 9.

As of May 3, 2025, we were in compliance with all debt covenants under the A&R Credit Agreement.

We have been working with our lenders to allow sufficient time for us to complete our internal investigation and the Restatement, and to prepare our quarterly report for the first quarter of fiscal 2026;

and as a result, we received an extension of the deadline to deliver our financial statements to our lenders.

As of the issuance date of this Annual Report on Form 10-K, and for all periods presented in these financial statements reported on this Form 10-K, we were in compliance with all debt covenants under the A&R Credit Agreement.

During the 53 weeks ended May 3, 2025, we borrowed $887.1 million and repaid $948.9 million under the Credit Facility, with $164.9 million of outstanding borrowings as of April 27, 2024, under the Credit Facility.

As of both May 3, 2025, and April 27, 2024, we have issued $0.6 million and $3.6 million, respectively, in letters of credit under the Credit Facility.

Pursuant to the A&R Credit Agreement, the lenders have committed to provide a four-year asset-based revolving credit facility (the "Credit Facility") in an aggregate committed principal amount of up to $325.0 million, with a maturity date of June 9, 2028.

During the 53 weeks ended May 3, 2025, we incurred debt issuance costs totaling $3.7 million related to the A&R Credit Agreement.

In connection with the delayed filing of our 2025 Annual Report and our Quarterly Reports on Form 10-Q for the first and second quarters of Fiscal 2026, we entered into a series of limited consent and waiver agreements with our lenders to extend certain financial reporting deadlines.

These waivers related solely to the timing of our filings and did not arise from noncompliance with any financial covenants.

Aggregate fees incurred in connection with these waivers totaled approximately $1.0 million, recognized as interest expense during Fiscal 2026.

As of May 2, 2026, and as of the issuance date of this Annual Report on Form 10-K, we were in compliance with all covenants under the A&R Credit Agreement.

For information regarding the A&R Credit Agreement terms, deferred financing costs, and covenant requirements, see Part II - Item 8.

Financial Statements and Supplementary Data - Note 10, Debt .

As of both May 2, 2026, and May 3, 2025, we have issued $0.7 million and $0.6 million, respectively, in letters of credit under the Credit Facility.

On June 10, 2024, pursuant to the Term Loan Credit Agreement by and among the Company, TopLids LendCo, LLC and Vital Fundco, LLC dated June 7, 2022 (the "Term Loan"), lenders converted approximately $34.0 million of outstanding principal and accrued and unpaid interest into our Common Stock, resulting in financing noncash flow activity totaling $86.8 million.

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Financial Statements and Supplementary Data - Note 10.

During the 53 weeks ended May 3, 2025, we incurred $0.0 million for interest in kind and repaid $0 under the Term Loan, with $0.0 million of outstanding borrowings as of May 3, 2025.

During the 52 weeks ended April 27, 2024, we incurred $2.7 million for interest in kind and repaid $0 under the Term Loan, with $32.7 million of outstanding borrowings as of April 27, 2024.

Deferred Financing Costs

The debt issuance costs have been deferred and are presented as noted below in the Consolidated Balance Sheets and are subsequently amortized ratably over the term of respective debt.

Index to Form 10-K Index to FS

Dollars in thousands As of

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Amortization Term (a)

May 3, 2025 April 27, 2024

Credit Facility - Prepaid and Other Current Assets

June 9, 2028 $ — $ —

May 2, 2026 May 3, 2025

Credit Facility - Other noncurrent assets

11,597 12,897

Credit Facility - sub-total

11,597 12,897

Term Loan - Contra Debt

Total deferred financing costs

$ 11,597 $ 14,160

June 9, 2028 $ 7,935 $ 11,597

(a) On June 10, 2024, we completed the Transactions, including amending and extending the maturity date of the Credit Facility, and converting all outstanding principal and interest amounts owed under our Term Loan into shares of our Common Stock.

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Financial Statements and Supplementary Data.

Index to Form 10-K Index to FS

The following table presents interest expense on the Consolidated Statements of Operations and cash interest paid:

52 weeks ended 53 weeks ended

May 3, 2025 April 27, 2024

May 2, 2026 May 3, 2025

Interest Incurred

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$ 12,531 $ 17,912

Income Tax Implications on Liquidity

The Company recognizes current income tax receivable for net operating loss carrybacks in prepaid and other current assets on the Consolidated Balance Sheet.

On August 24, 2024, a final refund of $2.7 million, including $0.3 million of interest, was received, and all refunds related to these carrybacks have been fully collected.

Refunds of $8.5 million and $15.8 million were received in Fiscal 2024 and Fiscal 2023, respectively.

Share Repurchases

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During Fiscal 2026 and Fiscal 2025, we purchased 93,842 shares and 429 shares, respectively, outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Index to Form 10-K Index to FS

Contractual Obligations

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Related Party Transactions .

Index to Form 10-K Index to FS

Critical Accounting Policies and Estimates

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Rental periods are typically for a single semester and are always less than one year in duration.

We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the

customer desires to do so.

We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so.

We record the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout.

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For those transactions where we are the principal, we record revenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis.

The Company recognizes revenue commissions from logo general merchandise sales, which are fulfilled by Lids and Fanatics, on a net basis in our consolidated financial statements.

We do not have gift card or customer loyalty programs.

We recognize revenue commissions from logo general merchandise sales, which are fulfilled by Lids and Fanatics, on a net basis in our consolidated financial statements.

As of Fiscal 2026 year-end, we did not have a customer loyalty program.

In the beginning of Fiscal 2027, we launched our own gift card program, and continue to honor Barnes & Noble Booksellers gift cards and sell third-party gift cards in our stores.

We do not treat any promotional offers as expenses.

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Our textbook and trade book inventories, for our retail and wholesale businesses, are valued using the LIFO method.

In Fiscal 2026, there was no required LIFO adjustment.

In Fiscal 2025 we recorded a LIFO adjustment in the amount of $6.4 million.

In Fiscal 2024, the LIFO reserve was not material to the recorded amount of our inventories and no such adjustment was made.

Reserves for non-returnable inventory represent write-downs that reduce the cost basis of the asset.

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As of May 2, 2026, our other long-lived assets include property and equipment, operating lease right-of-use assets, and amortizable intangibles of $34.1 million, $145.6 million, and $58.1 million, respectively, on our Consolidated Balance Sheet.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset may not be recoverable and consider market participants in accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets .

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and consider market participants in accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets .

We evaluate the long-lived assets of the reporting units for impairment at the lowest asset group level for which individual cash flows can be identified.

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During Fiscal 2026, we evaluated certain of our store-level long-lived assets for impairment.

During Fiscal 2025, we evaluated certain of our store-level long-lived assets for impairment.

The fair value of the impaired long-lived assets was determined using an income approach (Level 3 input), using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

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The significant assumptions used included annual revenue growth rates, gross margin rates and the estimated relationship of selling and administrative costs to revenue used to estimate the projected cash-flow directly related to the future operation of the stores as well as the weighted average cost of capital used to calculate the fair value.

Significant assumptions used to determine the fair values of certain operating right-of-use assets included the current market rent and discount rate.

Significant assumptions used to determine the fair values of certain operating right-of-use assets

included the current market rent and discount rate.

These assumptions are subjective in nature and are affected by expectations about future market or economic conditions.

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Summary of Significant Accounting Policies - Recent Accounting Pronouncements for information related to new accounting pronouncements.

Restatement of Quarterly (Unaudited) and Annual Financial Information

As explained further in the Explanatory Note at the beginning of this Form 10-K, the Company has restated its previously issued unaudited interim financial statements for the 13 weeks ended July 29, 2023, October 28, 2023, January 27, 2024, July 27, 2024, October 26, 2024 and January 25, 2025 and the audited annual financial statements for the year ended April 27, 2024.

Detailed restatements of the Company's consolidated quarterly financial statements are provided in Note 3.

Restatement of Previously Issued Audited Consolidated Financial Statements and Note 21.

Restatement of Quarterly Financial Information (Unaudited) in the accompanying notes to the consolidated financial statements.

The following unaudited quarterly and annual statements of operations data for the fiscal year ended April 27, 2024 have been prepared on a basis consistent with our audited annual financial statements included in this Form 10-K and include, in our opinion, all normal recurring adjustments necessary for the fair presentation of the financial information contained in those

Our historical results are not necessarily indicative of the results that may be expected in the future.

The following should be read in conjunction with our audited financial statements and the related notes included in this Form 10-K.

13 weeks ended

July 29, 2023 October 28, 2023 January 27, 2024 April 27, 2024

Product sales and other $ 252,650 $ 569,698 $ 415,375 $ 192,733

Rental income 11,511 $ 40,681 $ 41,298 43,189

Total sales 264,161 610,379 456,673 235,922

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

Product and other cost of sales 209,280 $ 448,073 $ 332,113 155,507

Rental cost of sales 6,676 $ 21,609 $ 23,959 25,005

Total cost of sales 215,956 469,682 356,072 180,512

48,205 140,697 100,601 55,410

Selling and administrative expenses 77,476 $ 85,961 $ 79,756 68,381

Depreciation and amortization expense 10,253 $ 10,175 $ 10,148 9,984

Impairment loss

— $ — $ 5,798 1,368

Other (income) expense

4,633 $ 4,274 $ 3,413 7,089

Operating (loss) income

$ (44,157) $ 40,287 $ 1,486 $ (31,412)

Interest expense, net 8,254 10,664 10,620 10,827

Loss from continuing operations before income taxes $ (52,411) $ 29,623 $ (9,134) $ (42,239)

Income tax expense (benefit)

89 532 487 (250)

Loss from continuing operations $ (52,500) $ 29,091 $ (9,621) $ (41,989)

Loss from discontinued operations

(417) (674) 289 72

Net (loss) income

$ (52,917) $ 28,417 $ (9,332) $ (41,917)

52 Weeks Ended April 27 2024

Product sales and other $ 1,430,456

Rental income 136,679

Total sales 1,567,135

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

Product and other cost of sales 1,144,973

Rental cost of sales 77,249

Total cost of sales 1,222,222

Selling and administrative expenses 311,574

Depreciation and amortization expense 40,560

Impairment loss

Other expense

Operating loss

Interest expense, net 40,365

Loss from continuing operations before income taxes (74,161)

Income tax expense 858

Loss from continuing operations, net of tax (75,019)

Loss from discontinued operations

Net loss $ (75,749)

Loss per share of Common Share

Basic and Diluted

Continuing operations $ (28.18)

Discontinued operations $ (0.28)

Total Basic and Diluted Net Loss per share $ (28.46)

Weighted average shares of common stock outstanding - Basic and Diluted 2,662,296

13 weeks ended

July 27, 2024 October 26, 2024 January 25, 2025

Product sales and other $ 250,926 $ 559,674 $ 419,663

Rental income 12,505 42,448 43,162

Total sales 263,431 602,122 462,825

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

Product and other cost of sales 211,385 451,026 343,559

Rental cost of sales 7,050 22,619 25,516

Total cost of sales 218,435 473,645 369,075

44,996 128,477 93,750

Selling and administrative expenses 67,023 72,940 71,561

Depreciation and amortization expense 13,071 8,542 7,827

Impairment loss

Other expense (income)

3,618 (150) (6,268)

Operating (loss) income

(38,716) 47,145 18,917

Loss on extinguishment of debt 55,233 — —

Interest expense, net 7,618 5,463 5,083

(Loss) income from continuing operations before income taxes

(101,567) 41,682 13,834

Income tax expense (benefit) 2,358 (1,480) (4,108)

Net (loss) income

$ (103,925) $ 43,162 $ 17,942

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-K

Item 7. Management’s Discussion and Analysis