Barnes & Noble Education reported higher sales and lower losses in the quarter ended January 27, 2024, but those results were overshadowed by news that the company is continuing to look for ways to shore up its financial position to enable it to continue operating.
In various filings, B&NE said that it is “engaged in advanced and ongoing discussions with third parties to evaluate a range of options to strengthen its liquidity and financial position.” The potential options under consideration, B&NE continued, include refinancing its financial obligations under its current credit agreements and a potential equity offering, “which would likely be conducted at a substantial discount to the current market price of the company’s common stock,” whose price is currently hovering around $0.63 per share.
In a filing with the Securities and Exchange Commission on March 8, B&NE warned that if it is going to continue to operate, it must raise enough funding to achieve liquidity and continue its restructuring efforts. The time spent by executives in talks to find ways to infuse more cash into the business—at the end of the quarter, B&NE only had $8.1 million in cash and cash equivalents, compared to a total outstanding debt of $254.3 million—resulted in a delay in the release of B&NE's quarterly report by several days and the canceling of its typical conference call with analysts to discuss those results.
In its quarterly filing with the SEC, B&NE suggested that it had made some progress in mending its financial problems. The company noted that, on March 12, it had amended its current credit agreement to, among other things, give it until as late as April 10 to enter into a new refinancing deal. The company faced similar cash crunch issues last summer, but was able to work out extension agreements with various parties.
B&NE’s renewed liquidity problems come as its “First Day” program—in which students pay for their course materials as either as part of tuition or another fee—continues to gain traction. First Day sales jumped 52% in the third quarter, to $184 million, over the comparable period a year ago, as gains in course materials sales offset declines of general merchandise. The strong performance from that program helped to lift total quarterly sales 4%, to $456.7 million, over a year ago. Higher sales and the impact of B&NE’s restructuring program combined to cut its net loss to $9.9 million in the period, from $22.1 million in the third quarter of fiscal 2024.
But even as First Day sales increased, questions over the future of the program arose in January, when USA Today ran a story saying that the Education Department was considering implementing a number rules which, among many other changes, would shift the First Day model—known as "equitable access" plans outside of B&NE—to an opt-in approach from the current opt-out, a change that could lower student participation.
