Segment Reporting (Notes)

6 Months Ended

Oct. 31, 2020

Segment Reporting

Note 6. 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 each segment's operations, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 2, 2020.

Retail

The Retail Segment operates 1,439 college, university, and K-12 school bookstores, comprised of 768 physical bookstores and 671 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 are offered at a reduced price through a fee charged by the institution or included in tuition, 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

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 768 physical bookstores) and sources and distributes new and used textbooks to our 671 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

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, writing and tutoring.

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.

Intercompany 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.

Summarized financial information for our reportable segments is reported below:

	13 weeks ended				26 weeks ended
	October 31, 2020		October 26, 2019		October 31, 2020		October 26, 2019
Sales:
Retail	$	576,514	$	741,769	$	735,290	$	1,016,425
Wholesale	36,387		40,210		116,681		112,519
DSS	5,947		5,215		11,819		10,589
Elimination	(23,363)		(14,966)		(64,291)		(47,648)
Total Sales	$	595,485	$	772,228	$	799,499	$	1,091,885
Gross Profit
Retail	$	95,512	$	160,940	$	111,647	$	223,079
Wholesale	10,714		12,535		27,471		27,453
DSS	4,662		4,141		9,408		8,555
Elimination	4,397		9,334		(2,379)		(480)
Total Gross Profit	$	115,285	$	186,950	$	146,147	$	258,607
Depreciation and Amortization
Retail	$	9,985	$	11,696	$	20,555	$	23,673
Wholesale	1,322		1,483		2,617		3,048
DSS	1,855		2,335		4,020		4,639
Corporate Services	31		32		64		65
Total Depreciation and Amortization	$	13,193	$	15,546	$	27,256	$	31,425
Operating Income (Loss)
Retail	$	7,072	$	50,267	$	(47,744)	$	15,225
Wholesale	5,246		6,459		16,917		15,053
DSS	(2,196)		(2,809)		(3,651)		(4,812)
Corporate Services	(7,844)		(6,870)		(15,396)		(12,420)
Elimination	4,455		9,384		(2,308)		(427)
Total Operating Income (Loss)	$	6,733	$	56,431	$	(52,182)	$	12,619

	13 weeks ended				26 weeks ended
	October 31, 2020		October 26, 2019		October 31, 2020		October 26, 2019
The following is a reconciliation of segment Operating Income (Loss) to consolidated Income (Loss) Before Income Taxes:
Total Operating Income (Loss)	$	6,733	$	56,431	$	(52,182)	$	12,619
Interest Expense, net	912		1,446		3,565		3,978
Income (Loss) Before Income Taxes	$	5,821	$	54,985	$	(55,747)	$	8,641