Barnes & Noble Education reported more bad news late last week as it continues struggling to find a viable business model in a higher education market that continues to move steadily away from print materials and toward digital content. B&NE operates about 1,380 physical and virtual bookstores on college campuses and some high schools, and also offers an array of digital course materials.
In a July 14 filing with the Security & Exchange Commission, B&NE said it was in talks with third parties “to evaluate a range of options to strengthen its liquidity and financial position.” Those options include refinancing its credit agreements. B&NE warne that, if a new agreement to “sufficiently enhance its liquidity” isn’t reached by the time it files its financial forms for fiscal 2023, management “likely would conclude that substantial doubt about the company’s ability to continue as a going concern exists.”
Companies typically have 90 days to file a 10-K form with the SEC after the end of a fiscal year—with the latest at B&NE ending on April 29—and the filing extends the deadline by another 15 days. The company needs the extra time, B&NE said, because if a “going concern” paragraph is included in its audited financial statements, it would trigger a default on its credit agreements.
B&NE has been looking for ways to reduce its debt for some time. In May, it sold the Student Brands and Bartleby products that comprised its digital student solutions segment, and used the $20 million net proceeds to pay down debt.
In announcing that sale, B&NE CEO Michael Huseby acknowledged that fiscal 2023 “did not meet our financial expectations.” The company has been engaged in cost cutting and other restructuring efforts to better align its overall expenses and resources with the ongoing trends of “declining enrollment and the proliferation of digital course materials,” Huseby said.
In its July 14 filing with the SEC, B&NE reported that revenue rose 3.2%, to $1.54 billion. However, the net loss from continuing operations increased to $90.1 million, from $61.6 million in fiscal 2022.
After word of the filing got out, B&NE’s stock price fell 20% on Monday, dropping to $1.27 per share.