Barnes & Noble Education announced this morning that it has appointed Lowell W. Robinson to its board of directors, as an independent director and as a member of the board’s audit committee, effective immediately. The company also said it has agreed to nominate Zachary Levenick as a candidate for election to the board at the 2020 annual meeting. Last month, both men had been put forth by investment firm Outerbridge as part of the alternative slate of candidates to run for the B&NE board.
The new moves were part of what the company called a “cooperation agreement” with Outerbridge, under which the firm has agreed to support all persons nominated to the board by the company. Outerbridge currently owns about 13.5% of B&NE’s shares.
Commenting on the agreement, Rory Wallace, chief investment officer of Outerbridge, had nothing but good things to say about B&NE. "With its unique set of offerings that serve digital, virtual, and in-person education, and its highly differentiated retail business, BNED has a special opportunity not only to deliver value to its shareholders, and to all stakeholders in the higher education system, but to help shape the future of the industry by stepping forward in this time of disruption,” he said in a statement.
Last week, B&NE reported a 9% drop in revenue in the fiscal year ended May 2, 2020, compared to fiscal 2019. Sales fell to $1.85 billion, from $2.03 billion last year. The company’s net loss rose to $38.3 million, from $24.4 million in fiscal 2019.
Revenue for the year was hurt by a poor fourth quarter, when sales fell 23.2% as the company was forced to close all of its college stores and furlough most of its store employees. The various cost-cutting measures B&NE enacted in the fourth quarter, however, lowered the loss in the period to $40.3 million, from $46.2 million in the fourth quarter of fiscal 2019.
Much like Wallace’s remarks, B&NE executives highlighted their ability to lower expenses while shifting the company’s emphasis from traditional print textbooks to the sale of digital products and services in their remarks on the fiscal 2020 performance.
Company executives said the onset of Covid-19 has accelerated the demand for its digital offerings. Among the digital highlight in the fiscal year, B&NE said, were the addition of 170,000 subscribers to its bartleby suite of solutions, which contributed to a “six-fold” increase in bartleby revenue over fiscal 2019. The company also completed its initial build of a new e-commerce platform.
Despite its various digital initiatives, B&NE’s digital student solutions division remained a small part of its business in fiscal 2020, generating revenue of $23.7 million, which is an increase of 10.9% over fiscal 2019.
The retail segment remains the company’s largest business by far, with fiscal 2020 revenue at $1.71 billion, a 9.3% decline from the previous year. The drop in sales came from a 9.9% decline in comparable store sales as well as from store closures. The company noted that while the spring rush had already passed by the time most of its stores closed, the company missed out on sales of its “high-margin general merchandise business,” which “was significantly impacted by campus store closures and canceled events, including NCAA sports tournaments and graduation season.”
Sales in the wholesale division fell 11.2% in the year, to $198.4 million, primarily due to lower textbook sales.
Looking to the upcoming fall term, CEO Michael Huseby said "a great deal of uncertainty still remains," adding: "Some campuses will extend their virtual learning for another semester, others are introducing shorter terms and/or hybrid learning models." CFO Tom Donohue said that while Covid-19 will impact B&NE’s business in the current fiscal year, the company has enough liquidity to operate its business in the year without the need to raise more capital.
As for reopening its 1,419 stores, Huseby said the company plans to reopen “based on national, state and local guidelines, and of course, in partnership with school administrations and the protocols that they implement.”