Note 7. Segment Reporting

We have three reportable segments: Retail, Wholesale and DSS. Additionally, unallocated shared-service costs, which include various corporate level expenses and other governance functions, continue to be presented as “Corporate Services”.

We identify our segments in accordance with the way our business is managed (focusing on the financial information distributed) and the manner in which our chief operating decision maker allocates resources and assesses financial performance. The following summarizes the three segments. For additional information about this segments operations, see Part I - Item 1. Business.

Retail Segment

The Retail Segment operates 1,419 college, university, and K-12 school bookstores, comprised of 772 physical bookstores and 647 virtual bookstores. Our bookstores typically operate under agreements with the college, university, or K-12 schools to be the official bookstore and the exclusive seller of course materials and supplies, including physical and digital products. The majority of the physical campus bookstores have school-branded e-commerce sites which we operate and which offer students access to affordable course materials and affinity products, including emblematic apparel and gifts. The Retail Segment also offers inclusive access programs, in which course materials, including e-content, are offered at a reduced price through a course materials fee, and delivered to students on or before the first day of class. Additionally, the Retail Segment offers a suite of digital content and services to colleges and universities, including a variety of open educational resource-based courseware.

Wholesale Segment

The Wholesale Segment is comprised of our wholesale textbook business and is one of the largest textbook wholesalers in the country. The Wholesale Segment centrally sources, sells, and distributes new and used textbooks to approximately 3,400 physical bookstores, including our Retail Segment's 772 physical bookstores and sources and distributes new and used textbooks to our 647 virtual bookstores. Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 400 college bookstores.

DSS Segment

The Digital Student Solutions (“DSS”) Segment includes direct-to-student products and services to assist students to study more effectively and improve academic performance. The DSS Segment is comprised of the operations of Student Brands, LLC, a leading direct-to-student subscription-based writing services business, and bartleby, a direct-to-student subscription-based offering providing textbook solutions, expert questions and answers, tutoring and test prep services.

Corporate Services

Corporate Services represents unallocated shared-service costs which include corporate level expenses and other governance functions, including executive functions, such as accounting, legal, treasury, information technology, and human resources.

Eliminations

The eliminations are primarily related to the following intercompany activities:


•	The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale, and

•

These cost of sales eliminations represent (i) the recognition of intercompany profit for Retail inventory that was purchased from Wholesale in a prior period that was subsequently sold to external customers during the current period and the elimination of Wholesale service fees charged for fulfillment of inventory for virtual store sales, net of (ii) the elimination of intercompany profit for Wholesale inventory purchases by Retail that remain in ending inventory at the end of the current period.

Our international operations are not material and the majority of the revenue and total assets are within the United States.



	As of
	May 2, 2020		April 27, 2019
Total Assets
Retail (includes goodwill of $0 and $0, respectively)	$	867,288	$	707,975
Wholesale (includes goodwill of $0 and $0, respectively)	248,464		191,976
DSS (includes goodwill of $4,700 and $4,700, respectively)	35,689		40,543
Corporate Services	4,991		5,686
Total Assets	$	1,156,432	$	946,180



	53 weeks ended May 2, 2020		52 weeks ended April 27, 2019		52 weeks ended April 28, 2018
Capital Expenditures
Retail	$	28,546	$	33,008	$	38,598
Wholesale	2,126		1,824		1,559
DSS ^(a)	5,425		11,444		2,620
Corporate Services	95		144		32
Total Capital Expenditures	$	36,192	$	46,420	$	42,809

(a) Primarily comprised of content development costs for bartleby.com textbook solutions which was launched in Fiscal 2019.

Summarized financial information for our reportable segments is reported below:



	53 weeks ended May 2, 2020 ^(a)			52 weeks ended April 27, 2019^(b)			52 weeks ended April 28, 2018^(c)
Sales:
Retail	$	1,712,892		$	1,889,008		$	2,024,541
Wholesale	198,353			223,374			258,369
DSS	23,661			21,339			15,762
Eliminations	(83,843		)	(99,078		)	(95,055		)
Total Sales	$	1,851,063		$	2,034,643		$	2,203,617

Gross Profit
Retail	$	383,282		$	451,871		$	482,226
Wholesale	39,805			56,341			60,328
DSS	19,313			20,030			15,403
Eliminations	149			(516		)	(724		)
Total Gross Profit	$	442,549		$	527,726		$	557,233

Depreciation and Amortization
Retail	$	47,099		$	51,728		$	53,955
Wholesale	5,963			6,014			6,188
DSS	8,670			7,974			5,253
Corporate Services	128			149			190
Total Depreciation and Amortization	$	61,860		$	65,865		$	65,586

Operating Loss
Retail ^(d)	$	(24,445	)	$	3,751		$	(265,843	)
Wholesale^(d)	12,909			(2,131		)	31,388
DSS	(8,529		)	(3,345		)	226
Corporate Services	(23,077		)	(25,463		)	(27,750		)
Eliminations	359			(466		)	(724		)
Total Operating Loss ^(d)	$	(42,783	)	$	(27,654	)	$	(262,703	)

The following is a reconciliation of segment Operating Loss to consolidated Income Before Income Taxes
Total Operating Loss	$	(42,783	)	$	(27,654	)	$	(262,703	)
Interest Expense, net	(7,445		)	(9,780		)	(10,306		)
Total Loss Before Income Taxes	$	(50,228	)	$	(37,434	)	$	(273,009	)


(a)	In Fiscal 2020, our business experienced an unprecedented and significant impact as a result of COVID-19 related campus store closures (the majority of which began in mid-March). The impact of the store closures affects the comparability of our results of operations and cash flows.


(b)	We acquired PaperRater on August 21, 2018. The consolidated financial statements for the 52 weeks ended April 27, 2019 include the financial results of PaperRater from the acquisition date, August 21, 2018, to April 27, 2019.


(c)	We acquired Student Brands, LLC on August 3, 2017. The consolidated financial statements for the 52 weeks ended April 28, 2018 include the financial results of Student Brands from the acquisition date, August 3, 2017, to April 28, 2018.


(d)	In Fiscal 2019, we recorded goodwill impairment (non-cash impairment loss) of $20,538 and $28,744 in our Retail and Wholesale Segments, respectively.

In Fiscal 2018, we recorded a goodwill impairment (non-cash impairment loss) of $313,130 in our Retail Segment (prior BNC segment) based on the results of our annual goodwill impairment test.