Barnes & Noble Education, Inc. Q1 FY2023 earnings call

• First quarter benefited from strong graduation season and increased on-campus traffic, boosting general merchandise sales, especially logo and emblematic products.
• Inclusive access programs drove 1.5% increase in comparable course material sales, with First Day sales up 67%.
• Research from University of New Hampshire validated FDC's positive impact on student outcomes, with 16% increase in course completion rates for participants.
• 111 campus stores utilizing First Day Complete for fall term, representing 85% growth in enrolled students compared to Fall 2021.
• Wholesale business impacted by supply constraints and shift to digital; DSS continued growth with Bartleby institutional partnership at Eastern Kentucky University.

Retail: Total sales for the quarter were $263.9 million, a $26 million increase compared to prior year. Benefited from rebound in general merchandise and course material sales, with inclusive access programs driving 1.5% increase in comparable course material sales. Total First Day sales grew 67% to $45 million. Wholesale: Net sales decreased $7.4 million or 16.6% to $37.1 million due to COVID-related supply constraints and shift to digital products. DSS: Sales grew $0.9 million or 10.6% to $9.2 million due to increased subscription sales.

• Expect continued growth in FDC due to strong pipeline of evaluating institutions.
• Anticipate robust Fall Rush sales period.
• Enrollment outlook will be clear after ad drop period and national reporting.

• Supply chain constraints affecting wholesale business.
• Impact of COVID-19 on on-campus textbook buybacks and buying patterns shifting to digital.
• Uncertainty around consumer spending behavior, especially with inflation.

Q: Enrollment outlook and Fall Rush traffic?

A: Too early to determine enrollment outlook, but improved inventory and increased FDC usage are positive. General merchandise inventory is better than last year, and 111 stores using First Day Complete.

Q: First Day Complete trends and Bartleby pipeline?

A: Positive trends but data not yet available; Bartleby has good pipeline interest with interest from other institutions and 11% increase in subscribers from last quarter.

Q: Consumer spending and debt forgiveness?

A: Too soon to tell if debt forgiveness affects spending, but expecting strong Fall Rush, managing inflation impacts by addressing price increases and internal cost structure