10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________

FORM 10-Q

_______________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 30, 2021

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission File Number: 1-37499

_______________________________________________

BARNES & NOBLE EDUCATION, INC.

(Exact Name of Registrant as Specified in Its Charter)

_______________________________________________

Delaware			46-0599018
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)
120 Mountain View Blvd.,	Basking Ridge,	NJ	07920
(Address of Principal Executive Offices)			(Zip Code)

(Registrant’s Telephone Number, Including Area Code): (908) 991-2665

Securities registered pursuant to Section 12(b) of the Act:

Title of Class	Trading Symbol	Name of Exchange on which registered
Common Stock, $0.01 par value per share	BNED	New York Stock Exchange

_______________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 26, 2021, 51,993,048 shares of Common Stock, par value $0.01 per share, were outstanding.

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Fiscal Quarter Ended October 30, 2021

Index to Form 10-Q

			Page No.
PART I -	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations – For the 13 and 26 weeks ended October 30, 2021 and October 31, 2020		3
	Condensed Consolidated Balance Sheets – As of October 30, 2021, October 31, 2020, and May 1, 2021		4
	Condensed Consolidated Statements of Cash Flows – For the 13 and 26 weeks ended October 30, 2021 and October 31, 2020		5
	Condensed Consolidated Statements of Equity – As of October 30, 2021 and October 31, 2020		6
	Notes to Condensed Consolidated Financial Statements		7
	Note 1.	Organization	7
	Note 2.	Summary of Significant Accounting Policies	8
	Note 3.	Revenue	12
	Note 4.	Segment Reporting	13
	Note 5.	Equity and Earnings Per Share	15
	Note 6.	Fair Value Measurements	16
	Note 7.	Credit Facility	17
	Note 8.	Leases	17
	Note 9.	Supplementary Information	18
	Note 10.	Long-Term Incentive Plan Compensation Expense	19
	Note 11.	Employee Benefit Plans	20
	Note 12.	Income Taxes	20
	Note 13.	Legal Proceedings	21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
	Overview		22
	Results of Operations		25
	Adjusted Earnings, Adjusted EBITDA, and Free Cash Flow (non-GAAP)		35
	Liquidity and Capital Resources		39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		42
Item 4.	Controls and Procedures		43
PART II -	OTHER INFORMATION
Item 1.	Legal Proceedings		43
Item 1A.	Risk Factors		43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 5.	Other Information		44
Item 6.	Exhibits		44
	SIGNATURES		45

2

PART I - FINANCIAL INFORMATION

Item 1:    Financial Statements

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited) 

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Sales:
Product sales and other	$	577,329	$	551,832	$	805,099	$	745,042
Rental income	49,648		43,653		62,672		54,457
Total sales	626,977		595,485		867,771		799,499
Cost of sales:
Product and other cost of sales	453,070		452,475		627,231		618,240
Rental cost of sales	28,348		27,725		34,952		35,112
Total cost of sales	481,418		480,200		662,183		653,352
Gross profit	145,559		115,285		205,588		146,147
Selling and administrative expenses	107,902		91,972		194,137		162,015
Depreciation and amortization expense	11,952		13,193		24,576		27,256
Restructuring and other charges	1,116		3,387		3,739		9,058
Operating income (loss)	24,589		6,733		(16,864)		(52,182)
Interest expense, net	2,264		912		4,758		3,565
Income (loss) before income taxes	22,325		5,821		(21,622)		(55,747)
Income tax (benefit) expense	(203)		(1,694)		196		(16,610)
Net income (loss)	$	22,528	$	7,515	$	(21,818)	$	(39,137)
Earnings (Loss) per share of common stock:
Basic	$	0.43	$	0.15	$	(0.42)	$	(0.81)
Diluted	$	0.41	$	0.15	$	(0.42)	$	(0.81)
Weighted average shares of common stock outstanding:
Basic	51,666		48,804		51,570		48,608
Diluted	54,568		49,428		51,570		48,608

See accompanying notes to condensed consolidated financial statements.

3

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data) 

	October 30, 2021		October 31, 2020		May 1, 2021
	(unaudited)		(unaudited)		(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,996	$	7,353	$	8,024
Receivables, net	218,053		167,493		121,072
Merchandise inventories, net	370,529		457,677		281,112
Textbook rental inventories	50,642		50,736		28,692
Prepaid expenses and other current assets	68,965		23,762		61,933
Total current assets	719,185		707,021		500,833
Property and equipment, net	91,875		93,130		89,172
Operating lease right-of-use assets	252,650		286,038		240,456
Intangible assets, net	141,847		166,140		150,904
Goodwill	4,700		4,700		4,700
Deferred tax assets, net	23,248		8,231		23,248
Other noncurrent assets	26,010		31,734		29,105
Total assets	$	1,259,515	$	1,296,994	$	1,038,418
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	333,099	$	314,042	$	137,578
Accrued liabilities	122,734		134,181		92,871
Current operating lease liabilities	118,434		121,518		92,513
Short-term borrowings	—		—		50,000
Total current liabilities	574,267		569,741		372,962
Long-term operating lease liabilities	171,341		198,990		184,780
Other long-term liabilities	51,113		48,329		52,042
Long-term borrowings	183,300		99,500		127,600
Total liabilities	980,021		916,560		737,384
Commitments and contingencies	—		—		—
Stockholders' equity:
Preferred stock, $0.01 par value; authorized, 5,000 shares; 0 shares issued and 0 shares outstanding	—		—		—
Common stock, $0.01 par value; authorized, 200,000 shares; issued, 54,162, 53,316 and 53,327 shares, respectively; outstanding, 51,976, 49,064 and 51,379 shares, respectively	541		533		533
Additional paid-in capital	736,886		735,647		734,257
Accumulated deficit	(436,432)		(321,964)		(414,614)
Treasury stock, at cost	(21,501)		(33,782)		(19,142)
Total stockholders' equity	279,494		380,434		301,034
Total liabilities and stockholders' equity	$	1,259,515	$	1,296,994	$	1,038,418

See accompanying notes to condensed consolidated financial statements.

4

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	26 weeks ended
	October 30, 2021		October 31, 2020
Cash flows from operating activities:
Net loss	$	(21,818)	$	(39,137)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization expense	24,576		27,256
Content amortization expense	2,586		2,386
Amortization of deferred financing costs	725		541
Merchandise inventory loss	434		—
Deferred taxes	—		(426)
Stock-based compensation expense	2,600		2,701
Changes in other long-term assets and liabilities, net	1,462		5,016
Changes in operating lease right-of-use assets and liabilities	286		6,597
Changes in other operating assets and liabilities, net	13,291		86,452
Net cash flows provided by operating activities	24,142		91,386
Cash flows from investing activities:
Purchases of property and equipment	(21,264)		(16,197)
Net change in other noncurrent assets	460		3
Net cash flows used in investing activities	(20,804)		(16,194)
Cash flows from financing activities:
Proceeds from borrowings under Credit Agreement	259,720		330,800
Repayments of borrowings under Credit Agreement	(254,020)		(406,000)
Purchase of treasury shares	(2,359)		(881)
Proceeds from the exercise of stock options, net	37		—
Net cash flows provided by (used in) financing activities	3,378		(76,081)
Net increase (decrease) in cash, cash equivalents and restricted cash	6,716		(889)
Cash, cash equivalents and restricted cash at beginning of period	16,814		9,008
Cash, cash equivalents and restricted cash at end of period	$	23,530	$	8,119
Changes in other operating assets and liabilities, net:
Receivables, net	$	(96,981)	$	(76,642)
Merchandise inventories	(89,851)		(28,738)
Textbook rental inventories	(21,950)		(10,026)
Prepaid expenses and other current assets	(3,288)		(7,585)
Accounts payable and accrued liabilities	225,361		209,443
Changes in other operating assets and liabilities, net	$	13,291	$	86,452

See accompanying notes to condensed consolidated financial statements.

5

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(In thousands)

(unaudited)

				Additional
	Common Stock			Paid-In		Accumulated		Treasury Stock			Total
	Shares	Amount		Capital		Deficit		Shares	Amount		Equity
Balance at May 2, 2020	52,140	$	521	$	732,958	$	(282,827)	3,842	$	(32,901)	$	417,751
Stock-based compensation expense				1,521							1,521
Vested equity awards	514	5		(5)							—
Shares repurchased for tax withholdings for vested stock awards								179	(342)		(342)
Net loss						(46,652)					(46,652)
Balance August 1, 2020	52,654	$	526	$	734,474	$	(329,479)	4,021	$	(33,243)	$	372,278
Stock-based compensation expense				1,180							1,180
Vested equity awards	662	7		(7)							—
Shares repurchased for tax withholdings for vested stock awards								231	(539)		(539)
Net income						7,515					7,515
Balance at October 31, 2020	53,316	$	533	$	735,647	$	(321,964)	4,252	$	(33,782)	$	380,434
				Additional
	Common Stock			Paid-In		Accumulated		Treasury Stock			Total
	Shares	Amount		Capital		Deficit		Shares	Amount		Equity
Balance at May 1, 2021	53,327	$	533	$	734,257	$	(414,614)	1,948	$	(19,142)	$	301,034
Stock-based compensation expense				1,122							1,122
Vested equity awards	338	3		(3)							—
Shares repurchased for tax withholdings for vested stock awards								130	(1,215)		(1,215)
Net loss						(44,346)					(44,346)
Balance July 31, 2021	53,665	$	536	$	735,376	$	(458,960)	2,078	$	(20,357)	$	256,595
Stock-based compensation expense				1,478							1,478
Vested equity awards	487	5		(5)							—
Shares repurchased for tax withholdings for vested stock awards								108	(1,144)		(1,144)
Issuance of common stock upon exercise of stock options	10	—		37							37
Net income						22,528					22,528
Balance October 30, 2021	54,162	$	541	$	736,886	$	(436,432)	2,186	$	(21,501)	$	279,494

See accompanying notes to condensed consolidated financial statements.

6

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

Unless the context otherwise indicates, references in these Notes to the accompanying condensed consolidated financial statements to “we,” “us,” “our” and “the Company” refer to Barnes & Noble Education or "BNED", Inc., a Delaware corporation. References to “Barnes & Noble College” refer to our college bookstore business operated through our subsidiary Barnes & Noble College Booksellers, LLC. References to “MBS” refer to our virtual bookstore and wholesale textbook distribution business operated through our subsidiary MBS Textbook Exchange, LLC.

This Form 10-Q should be read in conjunction with our Audited Consolidated Financial Statements and accompanying Notes to consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021, which includes consolidated financial statements for the Company for each of the three fiscal years ended May 1, 2021, May 2, 2020 and April 27, 2019 (Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively) and the unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the 13 weeks ended July 31, 2021.

Note 1. Organization

Description of Business

Barnes & Noble Education, Inc. (“BNED”) is one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education solutions. We operate 1,445 physical, virtual, and custom bookstores and serve more than 6 million students, delivering essential educational content and tools within a dynamic omnichannel retail environment. Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance.

The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands. We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our recent merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships. We expect general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the “FLC Partnership”. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our logo and emblematic general merchandise business.

We believe the Barnes & Noble brand (licensed from our former parent) along with our subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important to our relationship with leading publishers who rely on us as one of their primary distribution channels, and for being a trusted source for students in our direct-to-student digital solutions business.

We have three reportable segments: Retail, Wholesale and DSS. For additional information related to our strategies, operations and segments, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Partnership with Fanatics and FLC

In December 2020, we entered into the FLC Partnership. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our general merchandise business. Fanatics’ cutting-edge e-commerce and technology expertise offers our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform. Coupled with FLC, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.

We maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores. We also work closely with our campus partners to ensure that each campus store

7

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

maintains unique aspects of in-store merchandising, including localized product assortments and specific styles and designs that reflect each campus’s brand. We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites. FLC manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores.

In December 2020, Fanatics, Inc. and Lids Holdings, Inc. jointly made a strategic equity investment in BNED. On April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC, which was finalized during the first quarter of Fiscal 2022. As contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products during the first quarter of Fiscal 2022. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies - Merchandise Inventories and Note 6. Equity and Earnings Per Share in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

COVID-19 Business Impact

Since the fourth quarter of Fiscal 2020, our business has been significantly negatively impacted by the COVID-19 pandemic, resulting in an unprecedented material decline in revenue. Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings.

The COVID-19 impact on higher education remains a fluid situation, and we are committed to supporting our campus partners through our flexible offerings and our ability to quickly pivot to ensure uninterrupted service as institutions manage the safety of their campuses. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to how to operate our bookstores in the safest manner for our employees and customers. Please see our Part II - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. These condensed consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP. All material intercompany accounts and transactions have been eliminated in consolidation.

Our business is highly seasonal. Our quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. Due to the seasonal nature of the business, the results of operations for the 26 weeks ended October 30, 2021 are not indicative of the results expected for the 52 weeks ending April 30, 2022 (Fiscal 2022).

For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as MBS sells textbooks and other course materials for retail distribution. Our DSS segment sales and operating profit are realized relatively consistently throughout the year.

8

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

Use of Estimates

In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Restricted Cash

As of October 30, 2021 and October 31, 2020, we had restricted cash of $12,534 and $766, respectively, comprised of $11,637 and $0, respectively, in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the FLC Partnership's merchandising agreement and $897 and $766, respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

Merchandise Inventories

Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. Market value of our inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation. Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory, which includes certain significant assumptions, including markdowns, sales below cost, inventory aging and expected demand.

Cost is determined primarily by the retail inventory method for our Retail segment and last-in first out, or “LIFO”, method for our Wholesale segment. Our textbook inventories, for Retail and Wholesale, and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of our inventories.

For our physical bookstores, we also estimate and accrue shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends.

The Retail Segment fulfillment order is directed first to our wholesale business before other sources of inventory are utilized. The products that we sell originate from a wide variety of domestic and international vendors. After internal sourcing, the bookstore purchases textbooks from outside suppliers and publishers.

As contemplated by the FLC Partnership merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC and received proceeds of $41,773, and recognized a merchandise inventory loss on the sale of $10,262 in cost of goods sold during the 52 weeks ended May 1, 2021 for the Retail Segment. The final inventory sale price was determined during the first quarter of Fiscal 2022, at which time, we received additional proceeds of $1,906, and recognized a merchandise inventory loss on the sale of $434 in cost of goods sold for the Retail Segment.

Textbook Rental Inventories

Physical textbooks out on rent are categorized as textbook rental inventories. At the time a rental transaction is consummated, the book is removed from merchandise inventories and moved to textbook rental inventories at cost. The cost of the book is amortized down to its estimated residual value over the rental period. The related amortization expense is included in cost of goods sold. At the end of the rental period, upon return, the book is removed from textbook rental inventories and recorded in merchandise inventories at its amortized cost.

Leases

We recognize lease assets and lease liabilities on the condensed consolidated balance sheet for all operating lease arrangements based on the present value of future lease payments as required by Accounting Standards Codification ("ASC") Topic 842, Leases. We do not recognize lease assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less). We recognize lease expense on a straight-line basis over the lease term for contracts with fixed lease payments, including those with fixed annual minimums, or over a rolling twelve-month period for leases where the annual guarantee resets at the start of each contract year, in order to best reflect the pattern of usage of the underlying leased asset. For additional information, see Note 8. Leases.

9

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

Revenue Recognition and Deferred Revenue

Product sales and rentals

The majority of our revenue is derived from the sale of products through our bookstore locations, including virtual bookstores, and our bookstore affiliated e-commerce websites, and contains a single performance obligation. Revenue from sales of our products is recognized at the point in time when control of the products is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for the products. For additional information, see Note 3. Revenue.

Retail product revenue is recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers for products ordered through our websites and virtual bookstores. Wholesale product revenue is recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer. Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of goods sold.

Revenue from the rental of physical textbooks, which contains a single performance obligation, is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer. Rental periods are typically for a single semester and are always less than one year in duration. We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so. We record the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout. In these instances, we accelerate any remaining deferred rental revenue at the point of sale.

Revenue from the rental of digital textbooks, which contains a single performance obligation, is recognized at the point of sale. A software feature is embedded within the content of our digital textbooks, such that upon expiration of the rental term the customer is no longer able to access the content. While the digital rental allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, our performance obligation is complete.

We estimate returns based on an analysis of historical experience. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded.

For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer. There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service. For those transactions where we are the principal, we record revenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis. Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year.

We do not have gift card or customer loyalty programs. We do not treat any promotional offers as expenses. Sales tax collected from our customers is excluded from reported revenues. Our payment terms are generally 30 days and do not extend beyond one year.

Service and other revenue

Service and other revenue is primarily derived from DSS segment subscription-based service revenues and partnership marketing services which includes promotional activities and advertisements within our physical bookstores and web properties performed on behalf of third-party customers.

Subscription-based revenue, which contains a single performance obligation, is deferred and recognized based on the passage of time over the subscription period commencing at the point of sale, when control of the service transfers to the customer. The majority of subscriptions sold are one month in duration.

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

Partnership marketing agreements often include multiple performance obligations which are individually negotiated with our customers. For these arrangements that contain distinct performance obligations, we allocate the transaction price based on the relative standalone selling price method by comparing the standalone selling price (“SSP”) of each distinct performance obligation to the total value of the contract. The revenue is recognized as each performance obligation is satisfied, typically at a point in time for partnership marketing service and overtime for advertising efforts as measured based upon the passage of time for contracts that are based on a stated period of time or the number of impressions delivered for contracts with a fixed number of impressions.

Cost of Sales

Our cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.

Selling and Administrative Expenses

Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include long-term incentive plan compensation expense and general office expenses, such as merchandising, procurement, field support, finance and accounting, and operating costs related to our DSS segment subscription-based services business. Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services.

Evaluation of Goodwill and Other Long-Lived Assets

As of October 30, 2021, we had $0, $0 and $4,700 of goodwill on our condensed consolidated balance sheet related to our Retail, Wholesale and DSS reporting units, respectively. In accordance with ASC 350-10, Intangibles - Goodwill and Other, we complete our annual goodwill impairment test as of the first day of the third quarter of each fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the reporting unit exceeds its fair value. We completed our annual goodwill impairment test as of the first day of the third quarter of Fiscal 2021. The fair value of the DSS reporting unit was determined to exceed the carrying value of the reporting unit; therefore, no goodwill impairment was recognized.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. As of October 30, 2021, our other long-lived assets include property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets of $91,875, $252,650, $141,847, and $26,010, respectively, on our condensed consolidated balance sheet.

Our business has been significantly negatively impacted by the ongoing COVID-19 pandemic, as many schools continued to adjust their learning models and on-campus activities. Some of the negative trends impacting our results, such as fewer students returning to campus and restrictions to attendance for athletic events, have been marginally reversed during the current Fall semester. Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings. We believe indicators of impairment do not exist and the carrying amount of our long-lived assets and property and equipment are recoverable and the fair value of the DSS reporting unit continues to exceed the carrying value of the reporting unit resulting in no goodwill impairment during the quarter. We will continue to evaluate our other long-lived assets for indicators of impairment.

Income Taxes

As of October 30, 2021, other long-term liabilities includes $25,335 related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index (“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle.

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $745 of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months.

Note 3. Revenue

Revenue from sales of our products and services is recognized either at the point in time when control of the products is transferred to our customers or over time as services are provided in an amount that reflects the consideration we expect to be entitled to in exchange for the products or services. See Note 2. Summary of Significant Accounting Policies for additional information related to our revenue recognition policies and Note 4. Segment Reporting for a description of each segment's product and service offerings.

Disaggregation of Revenue

The following table disaggregates the revenue associated with our major product and service offerings:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Retail
Product Sales (a)	$	546,358	$	517,837	$	735,416	$	659,663
Rental Income	49,648		43,653		62,672		54,457
Service and Other Revenue (b)	12,946		15,024		21,333		21,170
Retail Total Sales	$	608,952	$	576,514	$	819,421	$	735,290
Wholesale Sales	$	21,669	$	36,387	$	66,153	$	116,681
DSS Sales (c)	$	8,279	$	5,947	$	16,582	$	11,819
Eliminations (d)	$	(11,923)	$	(23,363)	$	(34,385)	$	(64,291)
Total Sales	$	626,977	$	595,485	$	867,771	$	799,499

(a)Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year.

(b)Service and other revenue primarily relates to brand partnerships and other service revenues.

(c)DSS sales primarily relate to direct-to-student subscription-based revenue.

(d)The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.

Contract Assets and Contract Liabilities

Contract assets represent the sale of goods or services to a customer before we have the right to obtain consideration from the customer. Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional. Contract assets (unbilled receivables) were $0 as of October 30, 2021, October 31, 2020 and May 1, 2021 on our condensed consolidated balance sheets.

Contract liabilities represent an obligation to transfer goods or services to a customer for which we have received consideration and consists of our deferred revenue liability (deferred revenue). Deferred revenue consists of the following:

•advanced payments from customers related to textbook rental and subscription-based performance obligations, which are recognized ratably over the terms of the related rental or subscription periods;

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

•unsatisfied performance obligations associated with partnership marketing services, which are recognized when the contracted services are provided to our partnership marketing customers; and

•unsatisfied performance obligations associated with the premium paid for the sale of treasury shares, which are expected to be recognized over the term of the e-commerce and merchandising contracts for Fanatics and FLC, respectively.

Deferred revenue of $29,820, $32,844, and $13,469 is recorded in accrued liabilities and $4,470, $0, and $4,670 is recorded in other long-term liabilities on our condensed consolidated balance sheets for the periods ended October 30, 2021, October 31, 2020 and May 1, 2021, respectively. As of October 30, 2021, we expect to recognize $29,820 of the deferred revenue balance within the next 12 months. The following table presents changes in deferred revenue associated with our contract liabilities:

	26 weeks ended
	October 30, 2021		October 31, 2020
Deferred revenue at the beginning of period	$	18,139	$	13,373
Additions to deferred revenue during the period	82,515		91,051
Reductions to deferred revenue for revenue recognized during the period	(66,364)		(71,580)
Deferred revenue balance at the end of period	$	34,290	$	32,844

Note 4. 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 1, 2021.

Retail

The Retail Segment operates 1,445 college, university, and K-12 school bookstores, comprised of 794 physical bookstores and 651 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 independently or along with our merchant partners, 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 3,200 physical bookstores (including our Retail Segment's 794 physical bookstores) and sources and distributes new and used textbooks to our 651 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.

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

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 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Sales:
Retail	$	608,952	$	576,514	$	819,421	$	735,290
Wholesale	21,669		36,387		66,153		116,681
DSS	8,279		5,947		16,582		11,819
Elimination	(11,923)		(23,363)		(34,385)		(64,291)
Total Sales	$	626,977	$	595,485	$	867,771	$	799,499
Gross Profit
Retail (a)	$	128,825	$	95,512	$	176,968	$	111,647
Wholesale	5,620		10,714		16,025		27,471
DSS	6,906		4,662		13,936		9,408
Elimination	4,208		4,397		(1,341)		(2,379)
Total Gross Profit	$	145,559	$	115,285	$	205,588	$	146,147
Depreciation and Amortization
Retail	$	8,669	$	9,985	$	18,076	$	20,555
Wholesale	1,364		1,322		2,664		2,617
DSS	1,902		1,855		3,801		4,020
Corporate Services	17		31		35		64
Total Depreciation and Amortization	$	11,952	$	13,193	$	24,576	$	27,256
Operating Income (Loss)
Retail	$	29,596	$	7,072	$	(1,760)	$	(47,744)
Wholesale	(131)		5,246		4,983		16,917
DSS	(2,301)		(2,196)		(3,617)		(3,651)
Corporate Services	(6,868)		(7,844)		(15,226)		(15,396)
Elimination	4,293		4,455		(1,244)		(2,308)
Total Operating Income (Loss)	$	24,589	$	6,733	$	(16,864)	$	(52,182)

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

	13 weeks ended				26 weeks ended
Reconciliation of segment Operating Income (Loss) to consolidated Income (Loss) Before Income Taxes:	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Total Operating Income (Loss)	$	24,589	$	6,733	$	(16,864)	$	(52,182)
Interest Expense, net	2,264		912		4,758		3,565
Income (Loss) Before Income Taxes	$	22,325	$	5,821	$	(21,622)	$	(55,747)

(a)    For the 26 weeks ended October 30, 2021, gross margin includes a merchandise inventory loss of $434 in the Retail Segment. See Note 2. Summary of Significant Accounting Policies - Merchandise Inventories.

Note 5. Equity and Earnings Per Share

Equity

During the 26 weeks ended October 30, 2021, our shareholders approved an amendment to the Equity Incentive Plan to increase the number of shares available for issuance by an additional 3,000,000 shares of our Common Stock, for an aggregate total of 13,409,345 shares.

Share Repurchases

On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50,000, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 26 weeks ended October 30, 2021, we did not repurchase shares of our Common Stock under the program and as of October 30, 2021, approximately $26,669 remains available under the stock repurchase program.

During the 26 weeks ended October 30, 2021, we repurchased 238,170 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Earnings Per Share

Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. During the 13 weeks ended October 30, 2021 and October 31, 2020, average shares of 523,447 and 1,932,628 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, average shares of 3,771,594 and 2,849,291 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

The following is a reconciliation of the basic and diluted earnings per share calculation:

	13 weeks ended				26 weeks ended
(shares in thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Numerator for basic earnings per share:
Net income (loss) available to common shareholders	$	22,528	$	7,515	$	(21,818)	$	(39,137)
Less allocation of earnings to participating securities	(64)		(6)		—		—
Net income (loss) available to common shareholders	$	22,464	$	7,509	$	(21,818)	$	(39,137)
Numerator for diluted earnings per share:
Net income (loss) available to common shareholders	$	22,464	$	7,509	$	(21,818)	$	(39,137)
Allocation of earnings to participating securities	64		6		—		—
Less diluted allocation of earnings to participating securities	(61)		(6)		—		—
Net income (loss) available to common shareholders	$	22,467	$	7,509	$	(21,818)	$	(39,137)
Denominator for basic earnings per share:
Basic weighted average shares of Common Stock	51,666		48,804		51,570		48,608
Denominator for diluted earnings per share:
Basic weighted average shares of Common Stock	51,666		48,804		51,570		48,608
Average dilutive restricted stock units	611		235		—		—
Average dilutive performance shares	—		—		—		—
Average dilutive restricted shares	126		18		—		—
Average dilutive performance share units	255		224		—		—
Average dilutive stock options	1,910		147		—		—
Diluted weighted average shares of Common Stock	54,568		49,428		51,570		48,608
Earnings (Loss) per share of Common Stock:
Basic	$	0.43	$	0.15	$	(0.42)	$	(0.81)
Diluted	$	0.41	$	0.15	$	(0.42)	$	(0.81)

Note 6. Fair Value Measurements

In accordance with ASC No. 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1—Observable inputs that reflect quoted prices in active markets

Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable

Level 3—Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions

Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable. The fair values of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values because of the short-term nature of these instruments, which are all considered Level 1. The fair value of short-term and long-term debt approximates its carrying value.

Non-Financial Assets

Our non-financial assets include goodwill, property and equipment, operating lease right-of-use assets, and intangible assets. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. We review our

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets.

Non-Financial Liabilities

We granted phantom share units as long-term incentive awards which are settled in cash based on the fair market value of a share of common stock of the Company at each vesting date. The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions. As of October 30, 2021, we recorded a liability of $3,474 (Level 2 input) which is reflected in accrued liabilities ($2,345) and other long-term liabilities ($1,129) on the condensed consolidated balance sheet. As of October 31, 2020, we recorded a liability of $224 (Level 2 input) which is reflected in accrued liabilities $130 and other long-term liabilities $94 on the condensed consolidated balance sheet. For additional information, see Note 10. Long-Term Incentive Plan Compensation Expense.

Note 7. Credit Facility

We have a credit agreement (the “Credit Agreement”), amended March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $400,000 (the “Credit Facility”) effective from the date of the amendment. We have the option to request an increase in commitments under the Credit Facility of up to $100,000, subject to certain restrictions. Proceeds from the Credit Facility are used for general corporate purposes, including seasonal working capital needs. The agreement includes an incremental first in, last out seasonal loan facility (the “FILO Facility”) for a $100,000 incremental facility maintaining the maximum availability under the Credit Agreement at $500,000. On March 31, 2021, we were granted a waiver to the condition to the current draw under the FILO Facility.

For additional information including interest terms and covenant requirements related to the Credit Facility, refer to Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

During the 26 weeks ended October 30, 2021, we borrowed $259,720 and repaid $254,020 under the Credit Agreement, with $183,300 of outstanding borrowings as of October 30, 2021, comprised entirely of borrowings under the Credit Facility. During the 26 weeks ended October 31, 2020, we borrowed $330,800 and repaid $406,000 under the Credit Agreement, with $99,500 of outstanding borrowings as of October 31, 2020, comprised entirely of borrowings under the Credit Facility. As of both October 30, 2021 and October 31, 2020, we have issued $4,759 in letters of credit under the Credit Facility.

Note 8. Leases

We recognize lease assets and lease liabilities on the condensed consolidated balance sheets for substantially all lease arrangements as required by FASB ASC 842, Leases (Topic 842). Our portfolio of leases consists of operating leases comprised of operations agreements which grant us the right to operate on-campus bookstores at colleges and universities; real estate leases for office and warehouse operations; and vehicle leases. We do not have finance leases or short-term leases (i.e., those with a term of twelve months or less).

We recognize a right of use ("ROU") asset and lease liability in our condensed consolidated balance sheets for leases with a term greater than twelve months. Options to extend or terminate a lease are included in the determination of the ROU asset and lease liability when it is reasonably certain that such options will be exercised. Our lease terms generally range from one year to fifteen years and a number of agreements contain minimum annual guarantees, many of which are adjusted at the start of each contract year based on the actual sales activity of the leased premises for the most recently completed contract year.

Payment terms are based on the fixed rates explicit in the lease, including minimum annual guarantees, and/or variable rates based on: i) a percentage of revenues or sales arising at the relevant premises ("variable commissions"), and/or ii) operating expenses, such as common area charges, real estate taxes and insurance. For contracts with fixed lease payments, including those with minimum annual guarantees, we recognize lease expense on a straight-line basis over the lease term or over the contract year in order to best reflect the pattern of usage of the underlying leased asset and our minimum obligations arising from these types of leases. Our lease agreements do not contain any material residual value guarantees, material restrictions or covenants.

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BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

We used our incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable. We utilized an estimated collateralized incremental borrowing rate as of the effective date or the commencement date of the lease, whichever is later.

The following table summarizes lease expense:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Variable lease expense	$	30,738	$	27,275	$	42,440	$	34,682
Operating lease expense	48,990		49,635		65,363		59,431
Net lease expense	$	79,728	$	76,910	$	107,803	$	94,113

The increase in lease expense is primarily due to higher sales for contracts based on a percentage of revenue during the 26 weeks ended October 30, 2021 and the impact of the timing and reduction of minimum contractual guarantees due to temporary store closings due to the COVID pandemic during the 26 weeks ended October 31, 2020.

The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of October 30, 2021:

	As of
	October 30, 2021
Remainder of Fiscal 2022	$	91,979
Fiscal 2023	53,262
Fiscal 2024	43,624
Fiscal 2025	39,912
Fiscal 2026	28,939
Thereafter	72,832
Total lease payments	330,548
Less: imputed interest	(40,773)
Operating lease liabilities at period end	$	289,775

Future lease payment obligations related to leases that were entered into, but did not commence as of October 30, 2021, were not material.

The following summarizes additional information related to our operating leases:

	As of
	October 30, 2021			October 31, 2020
Weighted average remaining lease term (in years)	5.3 years			5.5 years
Weighted average discount rate	4.6		%	4.5		%
Supplemental cash flow information:
Cash payments for lease liabilities within operating activities	$	64,103		$	53,667
ROU assets obtained in exchange for lease liabilities from initial recognition	$	77,811		$	110,834

Note 9. Supplementary Information

Restructuring and other charges

During the 13 and 26 weeks ended October 30, 2021, we recognized restructuring and other charges totaling $1,116 and $3,739, respectively, comprised primarily of $418 and $1,968, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($754 is included in accrued liabilities in the condensed consolidated balance sheet as of October 30, 2021), $698 and $1,771, respectively, for costs

18

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

associated with professional service costs for restructuring, process improvements, development and integration associated with the FLC Partnership, shareholder activist activities, and liabilities for a facility closure.

During the 13 and 26 weeks ended October 31, 2020, we recognized restructuring and other charges totaling $3,387 and $9,058, respectively, comprised primarily of $1,075 and $4,471, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, ($7,092 is included in accrued liabilities in the condensed consolidated balance sheet as of October 31, 2020), $2,312 and $4,587, respectively, for costs associated with professional service costs for restructuring, process improvements, the financial advisor strategic review process, shareholder activist activities, and liabilities for a facility closure.

Note 10. Long-Term Incentive Plan Compensation Expense

We recognize compensation expense for restricted stock awards and performance share awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense for these awards based on the number of awards expected to vest, which includes an estimated average forfeiture rate. We calculate the fair value of these awards based on the closing stock price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model and compensation expense is recognized ratably over the requisite service period regardless of whether the market condition is satisfied.

For stock options granted with an "at market" exercise price, we determined the grant fair value using the Black-Scholes model and for stock options granted with "a premium" exercise price, we determined the grant date fair value using the Monte Carlo simulation model. The fair value models for stock options use assumptions that include the risk-free interest rate, expected volatility, expected dividend yield and expected term of the options.

During the 26 weeks ended October 30, 2021, we granted the following awards:

•47,216 restricted stock units ("RSU") awards and 35,412 restricted stock ("RS") awards with a one year vesting period to the Board of Directors ("BOD") members for annual compensation.

•809,282 restricted stock units ("RSU") awards to employees with a three year vesting period.

•322,495 stock options with an exercise price of $10.80 per stock option, which was the fair market value on the date of grant (Stock Option Grant #1) and 348,723 stock options with an exercise price of $13.30 per stock option, which was above the fair market value on the date of grant, (Stock Option Grant #2) granted to employees. The stock options are exercisable in four equal annual installments commencing one year after the date of grant and have a ten year term. Holders are not entitled to receive dividends (if any) prior to vesting and exercise of the options. The following summarizes the stock option fair value assumptions:

	Stock Option Grant #1			Stock Option Grant #2
Exercise Price	$	10.80		$	13.30
Valuation method utilized	Black-Scholes			Monte Carlo
Risk-free interest rate	0.94		%	0.94		%
Expected option term	6.2 years			10.0 years
Company volatility	74		%	74		%
Dividend yield	—		%	—		%
Grant date fair value per award	$	7.10		$	6.73

The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term. For Stock Option Grant #1, we are permitted to use the simplified approach to estimate the expected term of the stock options, which typically assumes exercise occurs at the mid-point between the end of the vesting period and the expiration date. The simplified approach is not allowed for premium-priced options (Stock Option Grant #2), which were estimated using a stock price multiple, as there is no option exercise history which to base an early exercise option. The expected stock option term represents the weighted average period of time that stock options granted are expected to be outstanding, based on vesting schedules and the

19

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

contractual term of the stock options. Volatility is based on the historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term.

•183,348 phantom share units granted to employees. Each phantom share represents the economic equivalent to one share of the Company's common stock and will be settled in cash based on the fair market value of a share of common stock at each vesting date in an amount not to exceed $32.40 per share. The phantom shares vest and will be settled in three equal installments commencing one year after the date of grant. The fair value of the phantom shares was determined using the closing stock price on the date of the award less the fair value of the call option which was estimated using the Black-Scholes model. The average fair value on the date of grant was $8.50 per phantom share using risk-free rates ranging from 0.08%-0.53% for the three tranches and annual volatility ranging from 78%-92% for the three tranches. The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions. As of October 30, 2021, we recorded a liability of $3,474 (Level 2 input) related to phantom share units grants which is reflected in accrued liabilities and other long-term liabilities on the condensed consolidated balance sheet.

We recognized compensation expense for long-term incentive plan awards in selling and administrative expenses as follows:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Stock-based awards
Restricted stock expense	$	119	$	20	$	207	$	50
Restricted stock units expense	931		976		1,661		2,335
Performance share units expense	29		73		63		205
Stock option expense	399		111		669		111
Sub-total stock-based awards:	$	1,478	$	1,180	$	2,600	$	2,701
Cash settled awards
Phantom share units expense	$	2,452	$	224	$	4,924	$	224
Total compensation expense for long-term incentive awards	$	3,930	$	1,404	$	7,524	$	2,925

Total unrecognized compensation cost related to unvested awards as of October 30, 2021 was $21,487 and is expected to be recognized over a weighted-average period of 2.8 years.

Note 11. Employee Benefit Plans

We sponsor defined contribution plans for the benefit of substantially all of the employees of BNC and DSS. MBS maintains a profit sharing plan covering substantially all full-time employees of MBS. For all plans, we are responsible to fund the employer contributions directly. Total employee benefit expense for these plans was $1,004 and $0 during the 13 weeks ended October 30, 2021 and October 31, 2020, respectively. Total employee benefit expense for these plans was $1,048 and $0 during the 26 weeks ended October 30, 2021 and October 31, 2020, respectively.

Effective April 2020, due to the significant impact as a result of COVID-19 related campus store closures, we temporarily suspended employer matching contributions into our 401(k) plans. The matching contributions were reinstated effective July 25, 2021.

Note 12. Income Taxes

We recorded an income tax benefit of $(203) on pre-tax income of $22,325 during the 13 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)% and an income tax benefit of $(1,694) on pre-tax income of $5,821 during the 13 weeks ended October 31, 2020, which represented an effective income tax rate of (29.1)%.

We recorded income tax expense of $196 on a pre-tax loss of $(21,622) during the 26 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)%% and an income tax benefit of $(16,610) on a pre-tax loss of $(55,747) during the 26 weeks ended October 31, 2020, which represented an effective income tax rate of 29.8%.

20

BARNES & NOBLE EDUCATION, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the 26 weeks ended October 30, 2021 and October 31, 2020

(Thousands of dollars, except share and per share data)

(unaudited)

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. As of October 30, 2021, we determined that it was more likely than not that we would not realize certain deferred tax assets and our tax rate for the current fiscal year reflects this determination. We will continue to evaluate this position.

The effective tax rate for the 26 weeks ended October 30, 2021 is lower as compared to the prior year comparable period due to the assessment of the realization of deferred tax assets and loss carrybacks recorded in the prior year.

Note 13. Legal Proceedings

We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on our condensed consolidated financial position, results of operations, or cash flows.

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Item 2:    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise indicates, references to “we,” “us,” “our” and “the Company” refer to Barnes & Noble Education, Inc. or “BNED”, a Delaware corporation. References to “Barnes & Noble College” or “BNC” refer to our subsidiary Barnes & Noble College Booksellers, LLC. References to “MBS” refer to our subsidiary MBS Textbook Exchange, LLC.

Overview

Description of Business

Barnes & Noble Education, Inc. (“BNED”) is one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education solutions. We operate 1,445 physical, virtual, and custom bookstores and serve more than 6 million students, delivering essential educational content and tools within a dynamic omnichannel retail environment. Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance.

The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands. We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our recent merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships.

We expect general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the FLC Partnership. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our logo and emblematic general merchandise business.

We believe the Barnes & Noble brand (licensed from our former parent) along with our subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important to our relationship with leading publishers who rely on us as one of their primary distribution channels, and for being a trusted source for students in our direct-to-student digital solutions business.

For additional information related to our business, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Partnership with Fanatics and FLC

In December 2020, we entered into the FLC Partnership. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our general merchandise business. Fanatics’ cutting-edge e-commerce and technology expertise offers our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform. Coupled with FLC, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.

We maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores. We also work closely with our campus partners to ensure that each campus store maintains unique aspects of in-store merchandising, including localized product assortments and specific styles and designs that reflect each campus’s brand. We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites. FLC manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores.

In December 2020, Fanatics, Inc. and Lids Holdings, Inc. jointly made a strategic equity investment in BNED. On April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC, which was finalized during the first quarter of Fiscal 2022. As contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products during the first quarter of Fiscal 2022. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed

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consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year. For additional information, see Item 1. Financial Statements - Note 2. Summary of Significant Accounting Policies - Merchandise Inventories.

COVID-19 Business Impact

Our business experienced an unprecedented and significant negative impact as a result of COVID-19 related campus store closures. Beginning in March 2020, colleges and universities nationwide began to close their campuses in light of safety concerns and as a result of local and state issued stay-at-home orders. By mid-March, during our Fiscal 2020 fourth quarter, we closed the majority of our physical campus stores to protect the health and safety of our customers and employees.

While our campus stores were closed, we continued to serve institutions and students through our campus websites, providing free shipping on all orders and an expanded digital content offering to provide immediate access to course materials to students at our campuses that closed due to COVID-19. We developed and implemented plans to safely reopen our campus stores based on national, state and local guidelines, as well as the campus policies set by the school administration.

Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and the effect on our ability to source products, including textbooks and general merchandise offerings. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to determine how to operate our bookstores in the safest manner for our employees and customers. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. For additional information, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Segments

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 1, 2021.

Retail Segment

The Retail Segment operates 1,445 college, university, and K-12 school bookstores, comprised of 794 physical bookstores and 651 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 independently or along with our merchant partners, 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 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 3,200 physical bookstores (including our Retail Segment's 794 physical bookstores) and sources and distributes new and used textbooks to our 651 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, writing and tutoring.

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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.

Seasonality

Our business is highly seasonal. Our quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April.

For our retail operations, sales are generally highest in the second and third fiscal quarters, when students generally purchase and rent textbooks and other course materials, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and third quarter, as it sells textbooks and other course materials for retail distribution. For our DSS segment, or direct-to-student business, sales and operating profit are realized relatively consistently throughout the year.

Trends, Competition and Other Business Conditions Affecting Our Business

The market for educational materials is undergoing unprecedented change. As tuition and other costs rise, colleges and universities face increasing pressure to attract and retain students and provide them with innovative, affordable educational content and tools that support their educational development. Current trends, competition and other factors affecting our business include:

•Overall Economic Environment, College Enrollment and Consumer Spending Patterns. Our business is affected by the impact of the COVID-19 pandemic, the overall economic environment, funding levels at colleges and universities, by changes in enrollments at colleges and universities, and spending on course materials and general merchandise.

•Impact of the COVID-19 Pandemic: The COVID-19 pandemic has materially and adversely impacted certain segments of the U.S. economy, with legislative and regulatory responses including unprecedented monetary and fiscal policy actions across all sectors, and there is significant uncertainty as to timing of stabilization and recovery, including the ability to gain adequate herd-immunity levels through vaccine programs and their resilience to future virus variants. Many colleges and K-12 schools were required to cease in-person classes in an attempt to limit the spread of the COVID-19 virus and ensure the safety of their students. Although many academic institutions have reopened, some are providing alternatives to traditional in-person instruction, including online and hybrid learning options and significantly reduced classroom sizes. Additionally, our business, like many others has been affected by the challenging labor market and the ability to recruit employees.

•Economic Environment: Retail general merchandise sales are subject to short-term fluctuations driven by the broader retail environment. The broader macro-economic global supply chain issues may also impact our ability to source school supplies and general merchandise sold in our campus bookstores, including technology-related products and emblematic clothing.

•Enrollment Trends: The growth of our business depends on our ability to attract new customers and to increase the level of engagement by our current student customers. We continue to see downward enrollment trends and shrinking resources from state and federal government for colleges and universities. Enrollment trends, specifically at community colleges, generally correlate with changes in the economy and unemployment factors, e.g. low unemployment tends to lead to low enrollment and higher unemployment rates tend to lead to higher enrollment trends, as students generally enroll to obtain skills that are in demand in the workforce. Enrollment trends have been negatively impacted overall by COVID-19 concerns at physical campuses. A significant reduction in U.S. economic activity and increased unemployment could lead to decreased enrollment and consumer spending. Additionally, enrollment trends are impacted by the dip in the United States birth rate resulting in fewer students at the traditional 18-24 year-old college age. Online degree program enrollments continue to grow, even in the face of declining overall higher education enrollment.

•Increased Use of Online and Digital Platforms as Companions or Alternatives to Printed Course Materials. Students and faculty can now choose from a wider variety of educational content and tools than ever before, delivered across both print and digital platforms.

•Increasing Costs Associated with Defending Against Security Breaches and Other Data Loss, Including Cyber-Attacks. We are increasingly dependent upon information technology systems, infrastructure and data. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. We continue to invest in data protection and information technology to prevent or minimize these risks and, to date, we have not experienced any material service interruptions and are not aware of any material breaches.

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•Distribution Network Evolving. The way course materials are distributed and consumed is changing significantly, a trend that is expected to continue. The market for course materials, including textbooks and supplemental materials, is intensely competitive and subject to rapid change.

•Disintermediation. We are experiencing growing competition from alternative media and alternative sources of textbooks and other course materials. In addition to the official physical or virtual campus bookstore, course materials are also sold through off-campus bookstores, e-commerce outlets, digital platform companies, publishers, including Cengage, Pearson and McGraw Hill, bypassing the bookstore distribution channel by selling or renting directly to students and educational institutions, and student-to-student transactions over the Internet.

•Supply Chain and Inventory. Since the demand for used textbooks has historically been greater than the available supply, our financial results are highly dependent upon Wholesale’s ability to build its textbook inventory from suppliers in advance of the selling season. Recently, the impact of fewer students on campus due to COVID-19 has significantly impacted our on-campus buyback programs which supplies Wholesale’s used textbook inventory for future selling periods. Some textbook publishers have begun to supply textbooks pursuant to consignment or rental programs which could impact used textbook supplies in the future. Additionally, Wholesale is a national distributor for rental textbooks offered through McGraw-Hill Education's and Pearson Education’s consignment rental program, both of which are relatively nascent. The broader macro-economic global supply chain issues may also impact our ability to source school supplies and general merchandise sold in our campus bookstores, including technology-related products and emblematic clothing.

•Price Competition. In addition to the competition in the services we provide to our customers, our textbook and other course materials business faces significant price competition. Students purchase textbooks and other course materials from multiple providers, are highly price sensitive, and can easily shift spending from one provider or format to another.

•A Large Number of Traditional Campus Bookstores Have Yet to be Outsourced.

•Outsourcing Trends. We continue to see the trend towards outsourcing in the campus bookstore market and also continue to see a variety of business models being pursued for the provision of course materials (such as inclusive access programs and publisher subscription models) and general merchandise.

•New and Existing Bookstore Contracts. We expect awards of new accounts resulting in new physical and virtual store openings will continue to be an important driver of future growth in our business. We also expect that certain less profitable or essential bookstores we operate may close. Such stores could be included in contracts for stores we operate that may be deemed non-essential; and such stores could be operated by others or independently by schools. The scope of any such store closures remains uncertain, although we are not aware, at this time, of any significant volume of stores which we operate that are likely to close or have informed us of upcoming closures.

For additional discussion of our trends and other factors affecting our business, see Part I - Item 1. Business in our Annual Report on Form 10-K for the year ended May 1, 2021.

Elements of Results of Operations

Our condensed consolidated financial statements reflect our consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). The results of operations reflected in our consolidated financial statements are presented on a consolidated basis. All material intercompany accounts and transactions have been eliminated in consolidation.

Our sales are primarily derived from the sale of course materials, which include new, used and digital textbooks, and at college and university bookstores which we operate, we sell high margin general merchandise, including emblematic apparel and gifts, trade books, computer products, school and dorm supplies, convenience and café items and graduation products. Our rental income is primarily derived from the rental of physical textbooks. We also derive revenue from other sources, such as sales of inventory management, hardware and point-of-sale software, direct-to-student subscription-based services, and other services.

Our cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.

Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include long-term incentive plan compensation expense and general office expenses, such as

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merchandising, procurement, field support, finance and accounting, and operating costs related to our direct-to-student subscription-based services business. Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services as discussed in the Overview - Segments discussion above.

Results of Operations - Summary

	13 weeks ended				26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Sales:
Product sales and other	$	577,329	$	551,832	$	805,099	$	745,042
Rental income	49,648		43,653		62,672		54,457
Total sales	$	626,977	$	595,485	$	867,771	$	799,499
Net income (loss)	$	22,528	$	7,515	$	(21,818)	$	(39,137)
Adjusted Earnings (non-GAAP) (a)	$	24,955	$	11,075	$	(15,059)	$	(30,641)
Adjusted EBITDA (non-GAAP) (a)
Retail	$	39,444	$	18,324	$	19,822	$	(22,316)
Wholesale	1,233		6,568		7,647		19,534
DSS	807		689		2,499		2,353
Corporate Services	(6,809)		(5,501)		(14,253)		(10,745)
Elimination	4,293		4,455		(1,244)		(2,308)
Total Adjusted EBITDA (non-GAAP)	$	38,968	$	24,535	$	14,471	$	(13,482)

(a)Adjusted Earnings and Adjusted EBITDA are non-GAAP financial measures. See Adjusted Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) discussion below.

The following table sets forth, for the periods indicated, the percentage relationship that certain items bear to total sales:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Sales:
Product sales and other	92.1	%	92.7	%	92.8	%	93.2	%
Rental income	7.9		7.3		7.2		6.8
Total sales	100.0		100.0		100.0		100.0
Cost of sales:
Product and other cost of sales (a)	78.5		82.0		77.9		83.0
Rental cost of sales (a)	57.1		63.5		55.8		64.5
Total cost of sales	76.8		80.6		76.3		81.7
Gross margin	23.2		19.4		23.7		18.3
Selling and administrative expenses	17.2		15.4		22.4		20.3
Depreciation and amortization expense	1.9		2.2		2.8		3.4
Restructuring and other charges	0.2		0.6		0.4		1.1
Operating income (loss)	3.9	%	1.2	%	(1.9)	%	(6.5)	%

(a)Represents the percentage these costs bear to the related sales, instead of total sales.

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Results of Operations - 13 and 26 weeks ended October 30, 2021 compared with the 13 and 26 weeks ended October 31, 2020

	13 weeks ended October 30, 2021
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Eliminations		Total
Sales:
Product sales and other	$	559,304	$	21,669	$	8,279	$	—	$	(11,923)	$	577,329
Rental income	49,648		—		—		—		—		49,648
Total sales	608,952		21,669		8,279		—		(11,923)		626,977
Cost of sales:
Product and other cost of sales	451,779		16,049		1,373		—		(16,131)		453,070
Rental cost of sales	28,348		—		—		—		—		28,348
Total cost of sales	480,127		16,049		1,373		—		(16,131)		481,418
Gross profit	128,825		5,620		6,906		—		4,208		145,559
Selling and administrative expenses	89,486		4,387		7,305		6,809		(85)		107,902
Depreciation and amortization expense	8,669		1,364		1,902		17		—		11,952
Sub-Total:	$	30,670	$	(131)	$	(2,301)	$	(6,826)	$	4,293	25,705
Restructuring and other charges											1,116
Operating income											$	24,589

	13 weeks ended October 31, 2020
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Eliminations		Total
Sales:
Product sales and other	$	532,861	$	36,387	$	5,947	$	—	$	(23,363)	$	551,832
Rental income	43,653		—		—		—		—		43,653
Total sales	576,514		36,387		5,947		—		(23,363)		595,485
Cost of sales:
Product and other cost of sales	453,277		25,673		1,285		—		(27,760)		452,475
Rental cost of sales	27,725		—		—		—		—		27,725
Total cost of sales	481,002		25,673		1,285		—		(27,760)		480,200
Gross profit	95,512		10,714		4,662		—		4,397		115,285
Selling and administrative expenses	77,380		4,146		5,003		5,501		(58)		91,972
Depreciation and amortization expense	9,985		1,322		1,855		31		—		13,193
Sub-Total:	$	8,147	$	5,246	$	(2,196)	$	(5,532)	$	4,455	10,120
Restructuring and other charges											3,387
Operating income											$	6,733

27

	26 weeks ended October 30, 2021
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Eliminations		Total
Sales:
Product sales and other	$	756,749	$	66,153	$	16,582	$	—	$	(34,385)	$	805,099
Rental income	62,672		—		—		—		—		62,672
Total sales	819,421		66,153		16,582		—		(34,385)		867,771
Cost of sales:
Product and other cost of sales	607,501		50,128		2,646		—		(33,044)		627,231
Rental cost of sales	34,952		—		—		—		—		34,952
Total cost of sales	642,453		50,128		2,646		—		(33,044)		662,183
Gross profit	176,968		16,025		13,936		—		(1,341)		205,588
Selling and administrative expenses	157,851		8,378		13,752		14,253		(97)		194,137
Depreciation and amortization expense	18,076		2,664		3,801		35		—		24,576
Sub-Total:	$	1,041	$	4,983	$	(3,617)	$	(14,288)	$	(1,244)	(13,125)
Restructuring and other charges											3,739
Operating loss											$	(16,864)

	26 weeks ended, October 31, 2020
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Eliminations		Total
Sales:
Product sales and other	$	680,833	$	116,681	$	11,819	$	—	$	(64,291)	$	745,042
Rental income	54,457		—		—		—		—		54,457
Total sales	735,290		116,681		11,819		—		(64,291)		799,499
Cost of sales:
Product and other cost of sales	588,531		89,210		2,411		—		(61,912)		618,240
Rental cost of sales	35,112		—		—		—		—		35,112
Total cost of sales	623,643		89,210		2,411		—		(61,912)		653,352
Gross profit	111,647		27,471		9,408		—		(2,379)		146,147
Selling and administrative expenses	134,365		7,937		9,039		10,745		(71)		162,015
Depreciation and amortization expense	20,555		2,617		4,020		64		—		27,256
Sub-Total:	$	(43,273)	$	16,917	$	(3,651)	$	(10,809)	$	(2,308)	(43,124)
Restructuring and other charges											9,058
Operating loss											$	(52,182)

Sales

The following table summarizes our sales for the 13 and 26 weeks ended October 30, 2021 and October 31, 2020:

	13 weeks ended					26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		%	October 30, 2021		October 31, 2020		%
Product sales and other	$	577,329	$	551,832	4.6%	$	805,099	$	745,042	8.1%
Rental income	49,648		43,653		13.7%	62,672		54,457		15.1%
Total Sales	$	626,977	$	595,485	5.3%	$	867,771	$	799,499	8.5%

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Sales increased by $31.5 million, or 5.3%, to $627.0 million during the 13 weeks ended October 30, 2021 from $595.5 million during the 13 weeks ended October 31, 2020. Sales increased by $68.3 million, or 8.5%, to $867.8 million during the 26 weeks ended October 30, 2021 from $799.5 million during the 26 weeks ended October 31, 2020. The sales increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year. The components of the variances for the 13 and 26 week periods are reflected in the table below.

Sales variances	13 weeks ended				26 weeks ended
Dollars in millions	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Retail Sales
New stores	$	26.3	$	27.6	$	36.6	$	35.4
Closed stores	(7.9)		(16.4)		(12.5)		(21.9)
Comparable stores (a)	14.0		(196.5)		58.6		(302.7)
Textbook rental deferral	3.2		16.4		3.4		10.1
Service revenue (b)	(2.1)		1.0		0.1		(3.7)
Other (c)	(1.1)		2.7		(2.1)		1.7
Retail sales subtotal:	$	32.4	$	(165.2)	$	84.1	$	(281.1)
Wholesale Sales	$	(14.7)	$	(3.8)	$	(50.5)	$	4.2
DSS Sales	$	2.3	$	0.7	$	4.8	$	1.2
Eliminations (d)	$	11.5	$	(8.4)	$	29.9	$	(16.7)
Total sales variance:	$	31.5	$	(176.7)	$	68.3	$	(292.4)

(a)    Effective April 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year period. For Comparable Store Sales details, see below.

(b)    Service revenue includes brand partnerships, shipping and handling, and revenue from other programs.

(c)    Other includes inventory liquidation sales to third parties, marketplace sales and certain accounting adjusting items related to return reserves, and other deferred items.

(d)    Eliminates Wholesale sales and service fees to Retail and Retail commissions earned from Wholesale. See discussion of intercompany activities and eliminations below.

Retail

Retail sales increased by $32.4 million, or 5.6%, to $608.9 million during the 13 weeks ended October 30, 2021 from $576.5 million during the 13 weeks ended October 31, 2020. Retail sales increased by $84.1 million, or 11.4%, to $819.4 million during the 26 weeks ended October 30, 2021 from $735.3 million during the 26 weeks ended October 31, 2020. Retail added 76 new stores and closed 48 stores during the 26 weeks ended October 30, 2021, ending the period with a total of 1,445 stores.

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Number of Stores:	Physical	Virtual	Physical	Virtual	Physical	Virtual	Physical	Virtual
Number of stores at beginning of period	784	645	772	670	769	648	772	647
Opened	11	12	5	11	41	35	29	51
Closed	1	6	9	10	16	32	33	27
Number of stores at end of period	794	651	768	671	794	651	768	671

Product and other sales for Retail for the 13 weeks ended October 30, 2021 increased by $26.4 million, or 5.0% to $559.3 million from $532.9 million during the 13 weeks ended October 31, 2020. Product and other sales for Retail for the 26 weeks ended October 30, 2021 increased by $75.9 million, or 11.2% to $756.7 million from $680.8 million during the 26 weeks ended October 31, 2020. The sales increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year.

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Product and other sales are impacted by comparable store sales (as noted in the chart below), new store openings and store closings, as well as the impact from the COVID-19 pandemic. Comparable textbook sales remained essentially flat, as compared to a 19% decline a year ago, as enrollment declines were mitigated by the growth of First Day (our inclusive access program). Revenue for First Day programs grew 80% to $96 million during the quarter. Comparable general merchandise sales increased 78.3%, as compared to a 52.0% decline a year ago, benefiting greatly from the return to an on campus learning experience and the resumption of many activities and events. Sales for general merchandise, including on-campus cafe and convenience products, and trade merchandise have increased compared to the prior year, when sales were impacted by the temporary store closings due to the COVID-19 pandemic, as well as the impact of fewer students returning to campus, as many schools implemented a remote learning model and curtailed on-campus classes and activities.

Sales were impacted by overall enrollment declines in higher education. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings. While many big-conferences resumed their sport activities, other on campus events, such as Parent's Weekends or Alumni events, continue to be either eliminated or severely restricted, which further impacted the company’s general merchandise business. First Day (our inclusive access program), digital and eTextbook revenue increased, due to a shift to lower cost options and more affordable solutions, including digital offerings.

To supplement the Total Sales table presented above in accordance with generally accepted accounting principles (“GAAP”), the Company uses the non-GAAP financial measure of Retail Gross Comparable Store Sales. Retail Gross Comparable Store Sales (non-GAAP) includes sales from physical and virtual stores that have been open for an entire fiscal year period and does not include sales from closed stores for all periods presented. As contemplated by the FLC Partnership's merchandising agreement and e-commerce agreement, we began to transition the fulfillment of logo and emblematic general merchandise sales to FLC and Fanatics. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic sales on a gross basis in the prior year period. For Retail Gross Comparable Store Sales (non-GAAP), sales for logo and emblematic general merchandise fulfilled by FLC, Fanatics and digital agency sales are included on a gross basis. We believe the current Retail Gross Comparable Store Sales (non-GAAP) calculation method reflects the manner in which management views comparable sales, as well as the seasonal nature of our business. Retail Gross Comparable Store Sales (non-GAAP) variances for Retail by category for the 13 and 26 week periods are as follows:

Retail Gross Comparable Store Sales (non-GAAP) variances
	13 weeks ended								26 weeks ended
Dollars in millions	October 30, 2021				October 31, 2020				October 30, 2021				October 31, 2020
Textbooks (Course Materials)	$	(0.5)	(0.1)	%	$	(101.6)	(19.0)	%	$	22.9	4.1	%	$	(112.5)	(17.5)	%
General Merchandise	72.7		78.3	%	(97.2)		(52.0)	%	121.5		90.6	%	(184.8)		(58.6)	%
Trade Books	1.3		33.8	%	(6.3)		(62.3)	%	3.2		60.7	%	(14.0)		(73.2)	%
Total Retail Gross Comparable Store Sales (non-GAAP)	$	73.5	13.2	%	$	(205.1)	(28.1)	%	$	147.6	21.0	%	$	(311.3)	(31.8)	%

Rental income for Retail for the 13 weeks ended October 30, 2021 increased by $6.0 million, or 13.7% to $49.6 million from $43.7 million during the 13 weeks ended October 31, 2020. Rental income for Retail for the 26 weeks ended October 30, 2021 increased by $8.2 million, or 15.1% to $62.7 million from $54.5 million during the 26 weeks ended October 31, 2020. Rental income is impacted by comparable store sales, new store openings and store closings. The increase in rental income is primarily due to increased rental activity due to the temporary store closings due the COVID-19 pandemic in the prior year discussed above.

Wholesale

Wholesale sales decreased by $14.7 million, or 40.5% to $21.7 million during the 13 weeks ended October 30, 2021 from $36.4 million during the 13 weeks ended October 31, 2020. Wholesale sales decreased by $50.5 million, or 43.3% to $66.2 million during the 26 weeks ended October 30, 2021 from $116.7 million during the 26 weeks ended October 31, 2020. The decrease is primarily due to lower gross sales impacted by the COVID-19 pandemic, including supply constraints resulting from the lack of on campus textbook buyback opportunities during the prior fiscal year, a decrease in customer demand resulting from a shift in buying patterns from physical textbooks to digital products, and lower demand from other third-party clients, partially offset by a lower returns and allowances. During the prior year period, the Wholesale operations assumed direct-to-student fulfillment of course material orders for the Retail Segment campus bookstores that were not fully operational due to COVID-19 campus store closures, whereas the sales shifted back to the physical bookstores in the current period.

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DSS

DSS total sales increased by $2.3 million, or 39.2% to $8.3 million during the 13 weeks ended October 30, 2021 from $6.0 million during the 13 weeks ended October 31, 2020. DSS total sales increased by $4.8 million, or 40.3% to $16.6 million during the 26 weeks ended October 30, 2021 from $11.8 million during the 26 weeks ended October 31, 2020. Sales increased primarily due to an increase in subscription sales.

Cost of Sales and Gross Margin

Our cost of sales decreased as a percentage of sales to 76.8% during the 13 weeks ended October 30, 2021 compared to 80.6% during the 13 weeks ended October 31, 2020. Our gross margin increased by $30.3 million, or 26.3%, to $145.6 million, or 23.2% of sales, during the 13 weeks ended October 30, 2021 from $115.3 million, or 19.4% of sales during the 13 weeks ended October 31, 2020.

Our cost of sales decreased as a percentage of sales to 76.3% during the 26 weeks ended October 30, 2021 compared to 81.7% during the 26 weeks ended October 31, 2020. Our gross margin increased by $59.4 million, or 40.7%, to $205.6 million, or 23.7% of sales, during the 26 weeks ended October 30, 2021 from $146.1 million, or 18.3% of sales during the 26 weeks ended October 31, 2020. During the 26 weeks ended October 30, 2021, we recognized a merchandise inventory loss of $0.4 million in cost of goods sold in the Retail Segment discussed below. For additional information, see Item 1. Financial Statements - Note 2. Summary of Significant Accounting Policies - Merchandise Inventories.

Retail

The following table summarizes the Retail cost of sales for the 13 and 26 weeks ended October 30, 2021 and October 31, 2020: 

	13 weeks ended						26 weeks ended
Dollars in thousands	October 30, 2021		% of Related Sales	October 31, 2020		% of Related Sales	October 30, 2021		% of Related Sales	October 31, 2020		% of Related Sales
Product and other cost of sales	$	451,779	80.8%	$	453,277	85.1%	$	607,501	80.3%	$	588,531	86.4%
Rental cost of sales	28,348		57.1%	27,725		63.5%	34,952		55.8%	35,112		64.5%
Total Cost of Sales	$	480,127	78.8%	$	481,002	83.4%	$	642,453	78.4%	$	623,643	84.8%

The following table summarizes the Retail gross margin for the 13 and 26 weeks ended October 30, 2021 and October 31, 2020:

	13 weeks ended						26 weeks ended
Dollars in thousands	October 30, 2021		% of Related Sales	October 31, 2020		% of Related Sales	October 30, 2021		% of Related Sales	October 31, 2020		% of Related Sales
Product and other gross margin	$	107,525	19.2%	$	79,584	14.9%	$	149,248	19.7%	$	92,302	13.6%
Rental gross margin	21,300		42.9%	15,928		36.5%	27,720		44.2%	19,345		35.5%
Gross Margin	$	128,825	21.2%	$	95,512	16.6%	$	176,968	21.6%	$	111,647	15.2%

For the 13 weeks ended October 30, 2021, the Retail gross margin as a percentage of sales increased as discussed below:

•Product and other gross margin increased (430 basis points), driven primarily by a favorable sales mix (400 basis points) due to higher general merchandise sales, lower contract costs as a percentage of sales related to our college and university contracts (25 basis points) resulting from contract renewals and new store contracts, and higher margin rates (5 basis points) due to lower inventory reserves and lower markdowns.

•Rental gross margin increased (640 basis points), driven primarily by higher rental margin rates (595 basis points) and lower contract costs as a percentage of sales related to our college and university contracts (285 basis points), partially offset by an unfavorable rental mix (240 basis points).

For the 26 weeks ended October 30, 2021, the Retail gross margin as a percentage of sales increased as discussed below:

•Product and other gross margin increased (610 basis points), driven primarily by a favorable sales mix (475 basis points) due to higher general merchandise sales, higher margin rates (130 basis points) due to lower inventory reserves and lower markdowns, and lower contract costs as a percentage of sales related to our college and university contracts (5 basis points) resulting from contract renewals and new store contracts, partially offset by an inventory merchandise loss of $0.4 million (5 basis points) related to the final sale of our logo and emblematic general merchandise inventory below

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cost to FLC.

•Rental gross margin increased (870 basis points), driven primarily by higher rental margin rates (590 basis points) and lower contract costs as a percentage of sales related to our college and university contracts (470 basis points), partially offset by an unfavorable rental mix (190 basis points).

Wholesale

The cost of sales and gross margin for Wholesale were $16.1 million, or 74.1% of sales, and $5.6 million, or 25.9% of sales, respectively, during the 13 weeks ended October 30, 2021. The cost of sales and gross margin for Wholesale was $25.7 million or 70.6% of sales and $10.7 million or 29.4% of sales, respectively, during the 13 weeks ended October 31, 2020. The gross margin rate decreased during the 13 weeks ended October 30, 2021 primarily due to higher markdowns, partially offset by a favorable sales mix.

The cost of sales and gross margin for Wholesale were $50.1 million, or 75.8% of sales, and $16.0 million, or 24.2% of sales, respectively, during the 26 weeks ended October 30, 2021. The cost of sales and gross margin for Wholesale was $89.2 million or 76.5% of sales and $27.5 million or 23.5% of sales, respectively, during the 26 weeks ended October 31, 2020. The gross margin rate increased during the 26 weeks ended October 30, 2021 primarily due to a favorable sales mix and lower markdowns, partially offset by the unfavorable impact of returns and allowances.

DSS

The gross margin for the DSS segment was $6.9 million, or 83.4% of sales, during the 13 weeks ended October 30, 2021 and $4.7 million, or 78.4% of sales, during the 13 weeks ended October 31, 2020. The gross margin for the DSS segment was $13.9 million, or 84.0% of sales, during the 26 weeks ended October 30, 2021 and $9.4 million, or 79.6% of sales, during the 26 weeks ended October 31, 2020. The high gross margins are driven primarily by high margin subscription service revenue earned.

Intercompany Eliminations

During the 13 weeks ended October 30, 2021 and October 31, 2020, our sales eliminations were $(11.9) million and $(23.4) million, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, our sales eliminations were $(34.4) million and $(64.3) million, respectively. These sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.

During the 13 weeks ended October 30, 2021 and October 31, 2020, the cost of sales eliminations were $(16.1) million and $(27.8) million, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, the cost of sales eliminations were $(33.0) million and $(61.9) million, respectively. 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.

During the 13 weeks ended October 30, 2021 and October 31, 2020, the gross margin eliminations were $4.2 million and $4.4 million, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, the gross margin eliminations were $(1.3) million and $(2.4) million, respectively. The gross margin eliminations reflect the net impact of the sales eliminations and cost of sales eliminations during the above mentioned reporting periods.

Selling and Administrative Expenses

	13 weeks ended						26 weeks ended
Dollars in thousands	October 30, 2021		% of Sales	October 31, 2020		% of Sales	October 30, 2021		% of Sales	October 31, 2020		% of Sales
Total Selling and Administrative Expenses	$	107,902	17.2%	$	91,972	15.4%	$	194,137	22.4%	$	162,015	20.3%

During the 13 weeks ended October 30, 2021, selling and administrative expenses increased by $15.9 million, or 17.3%, to $107.9 million from $92.0 million during the 13 weeks ended October 31, 2020. During the 26 weeks ended October 30, 2021, selling and administrative expenses increased by $32.1 million, or 19.8%, to $194.1 million from $162.0 million during the 26 weeks ended October 31, 2020. The variances by segment are discussed by segment below.

The increase in selling and administrative expenses is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year. Additionally, during the 13 and 26 weeks ended October 30, 2021, long-term incentive compensation expense increased by $2.5 million and $4.6 million, respectively, primarily related to cash-settled phantom share unit awards which are remeasured at the end of each reporting period to reflect current assumptions, including changes in the our common stock price.

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Retail

During the 13 weeks ended October 30, 2021, Retail selling and administrative expenses increased by $12.1 million, or 15.6%, to $89.5 million from $77.4 million during the 13 weeks ended October 31, 2020. This increase was primarily due to a $10.2 million increase in stores payroll and operating expenses including comparable stores, virtual stores and new/closed stores payroll and operating expenses, a $1.3 million increase in corporate payroll, infrastructure and product development costs and $0.6 million increase in incentive plan compensation expense related to phantom share awards as discussed above. The payroll increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year.

During the 26 weeks ended October 30, 2021, Retail selling and administrative expenses increased by $23.5 million, or 17.5%, to $157.9 million from $134.4 million during the 26 weeks ended October 31, 2020. This increase was primarily due to a $22.3 million increase in stores payroll and operating expenses including comparable stores, virtual stores and new/closed stores payroll and operating expenses, a $1.1 million increase in incentive plan compensation expense related to phantom share awards as discussed above, and a $0.1 million increase in corporate payroll, infrastructure and product development costs. The payroll increase is primarily related to the impact from re-opening stores that had temporarily closed due to the COVID-19 pandemic in the prior year.

Wholesale

Wholesale selling and administrative expenses increased by $0.3 million, or 5.8%, to $4.4 million from $4.1 million during the 13 weeks ended October 31, 2020. Wholesale selling and administrative expenses increased by $0.5 million, or 5.6%, to $8.4 million from $7.9 million during the 26 weeks ended October 31, 2020. The increase in selling and administrative expenses was primarily driven by higher incentive plan compensation expense related to phantom share awards, as discussed above.

DSS

During the 13 weeks ended October 30, 2021, DSS selling and administrative expenses increased by $2.3 million, or 46.0%, to $7.3 million from $5.0 million during the 13 weeks ended October 31, 2020. During the 26 weeks ended October 30, 2021, DSS selling and administrative expenses increased by $4.7 million, or 52.1%, to $13.8 million from $9.0 million during the 26 weeks ended October 31, 2020. The increase in costs was primarily driven by higher operating costs invested in the business associated with higher product development and sales costs aimed at increasing revenue, and higher incentive plan compensation expense related to phantom share awards, as discussed above.

Corporate Services

During the 13 weeks ended October 30, 2021, Corporate Services' selling and administrative expenses increased by $1.3 million, or 23.8%, to $6.8 million from $5.5 million during the 13 weeks ended October 31, 2020. The increase was primarily due to higher incentive plan compensation expense related to phantom share awards of $1.6 million, as discussed above, partially offset by lower operating costs of $0.3 million.

During the 26 weeks ended October 30, 2021, Corporate Services' selling and administrative expenses increased by $3.5 million, or 32.6%, to $14.3 million from $10.8 million during the 26 weeks ended October 31, 2020. The increase was primarily due to higher incentive plan compensation expense related to phantom share awards of $3.0 million, as discussed above, and higher operating expenses of $0.5 million.

Depreciation and Amortization Expense

	13 weeks ended						26 weeks ended
Dollars in thousands	October 30, 2021		% of Sales	October 31, 2020		% of Sales	October 30, 2021		% of Sales	October 31, 2020		% of Sales
Total Depreciation and Amortization Expense	$	11,952	1.9%	$	13,193	2.2%	$	24,576	2.8%	$	27,256	3.4%

Depreciation and amortization expense decreased by $1.2 million, or 9.4%, to $12.0 million during the 13 weeks ended October 30, 2021 from $13.2 million during the 13 weeks ended October 31, 2020. Depreciation and amortization expense decreased by $2.7 million, or 9.8%, to $24.6 million during the 26 weeks ended October 30, 2021 from $27.3 million during the 26 weeks ended October 31, 2020.The decrease was primarily attributable to lower depreciable assets and intangibles due to the store impairment loss recognized during the third quarter of Fiscal 2021.

Restructuring and other charges

During the 13 and 26 weeks ended October 30, 2021, we recognized restructuring and other charges totaling $1.1 million and $3.7 million, respectively, comprised primarily of $0.4 million and $2.0 million, respectively, for severance and other

33

employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, $0.7 million and $1.7 million, respectively, for costs associated with professional service costs for restructuring, process improvements, development and integration associated with the FLC Partnership, shareholder activist activities, and liabilities for a facility closure.

During the 13 and 26 weeks ended October 31, 2020, we recognized restructuring and other charges totaling $3.4 million and $9.1 million, respectively, comprised primarily of $1.1 million and $4.5 million, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, $2.3 million and $4.6 million, respectively, for costs associated with professional service costs for restructuring, process improvements, shareholder activist activities, and liabilities for a facility closure.

Operating Income (Loss)

	13 weeks ended						26 weeks ended
Dollars in thousands	October 30, 2021		% of Sales	October 31, 2020		% of Sales	October 30, 2021		% of Sales	October 31, 2020		% of Sales
Total Operating Income (Loss)	$	24,589	3.9%	$	6,733	1.2%	$	(16,864)	(1.9)%	$	(52,182)	(6.5)%

Our operating income was $24.6 million during the 13 weeks ended October 30, 2021, compared to operating income of $6.7 million during the 13 weeks ended October 31, 2020. The increase in operating income is due to the matters discussed above. For the 13 weeks ended October 30, 2021, excluding the $1.1 million of restructuring and other charges discussed above, operating income was $25.7 million (or 4.1% of sales). For the 13 weeks ended October 31, 2020, excluding the $3.4 million of restructuring and other charges, discussed above, operating income was $10.1 million (or 1.7% of sales).

Our operating loss was $(16.9) million during the 26 weeks ended October 30, 2021, compared to an operating loss of $(52.2) million during the 26 weeks ended October 31, 2020. The decrease in operating loss is due to the matters discussed above. For the 26 weeks ended October 30, 2021, excluding the $0.4 million of merchandise inventory loss and the $3.7 million of restructuring and other charges discussed above, operating loss was $(12.7) million (or (1.5)% of sales). For the 26 weeks ended October 31, 2020, excluding the $9.1 million of restructuring and other charges, discussed above, operating loss was $(43.1) million (or (5.4)% of sales).

Interest Expense, Net

	13 weeks ended				26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Interest Expense, Net	$	2,264	$	912	$	4,758	$	3,565

Net interest expense increased by $1.4 million, or 148.4%, to $2.3 million during the 13 weeks ended October 30, 2021 from $0.9 million during the 13 weeks ended October 31, 2020. Net interest expense increased by $1.2 million, or 33.5%, to $4.8 million during the 13 weeks ended October 30, 2021 from $3.6 million during the 13 weeks ended October 31, 2020. The increase was primarily due to higher borrowings compared to the prior year.

Income Tax (Benefit) Expense

	13 weeks ended						26 weeks ended
Dollars in thousands	October 30, 2021		Effective Rate	October 31, 2020		Effective Rate	October 30, 2021		Effective Rate	October 31, 2020		Effective Rate
Income Tax (Benefit) Expense	$	(203)	(0.9)%	$	(1,694)	(29.1)%	$	196	(0.9)%	$	(16,610)	29.8%

We recorded an income tax benefit of $(0.2) million on pre-tax income of $22.3 million during the 13 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)% and we recorded an income tax benefit of $(1.7) million on a pre-tax income of $5.8 million during the 13 weeks ended October 31, 2020, which represented an effective income tax rate of (29.1)%.

We recorded income tax expense of $0.2 million on a pre-tax loss of $(21.6) million during the 26 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)% and we recorded an income tax benefit of $(16.6) million on a pre-tax loss of $(55.7) million during the 26 weeks ended October 31, 2020, which represented an effective income tax rate of 29.8%.

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The effective tax rate for the 26 weeks ended October 30, 2021 is lower as compared to the comparable prior year due to the assessment of the realization of deferred tax assets and loss carrybacks recorded in the prior year.

Net Income (Loss)

	13 weeks ended				26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Net income (loss)	$	22,528	$	7,515	$	(21,818)	$	(39,137)

As a result of the factors discussed above, net income was $22.5 million during the 13 weeks ended October 30, 2021, compared with net income of $7.5 million during the 13 weeks ended October 31, 2020. As a result of the factors discussed above, net loss was $(21.8) million during the 26 weeks ended October 30, 2021, compared with net loss of $(39.1) million during the 26 weeks ended October 31, 2020.

Adjusted Earnings (non-GAAP) is $25.0 million during the 13 weeks ended October 30, 2021, compared with $11.1 million during the 13 weeks ended October 31, 2020. Adjusted Earnings (non-GAAP) is $(15.1) million during the 26 weeks ended October 30, 2021, compared with $(30.6) million during the 26 weeks ended October 31, 2020. See Adjusted Earnings (non-GAAP) discussion below.

Use of Non-GAAP Measures - Adjusted Earnings, Adjusted EBITDA and Free Cash Flow

To supplement our results prepared in accordance with generally accepted accounting principles (“GAAP”), we use the measure of Adjusted Earnings, Adjusted EBITDA, and Free Cash Flow, which are non-GAAP financial measures under Securities and Exchange Commission (the “SEC”) regulations. We define Adjusted Earnings as net income adjusted for certain reconciling items that are subtracted from or added to net income. We define Adjusted EBITDA as net income plus (1) depreciation and amortization; (2) interest expense and (3) income taxes, (4) as adjusted for items that are subtracted from or added to net income. We define Free Cash Flow as Adjusted EBITDA less capital expenditures, cash interest and cash taxes.

To properly and prudently evaluate our business, we encourage you to review our condensed consolidated financial statements included elsewhere in this Form 10-K, the reconciliation of Adjusted Earnings to net income and the reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, set forth in the tables below. All of the items included in the reconciliations below are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance.

These non-GAAP financial measures are not intended as substitutes for and should not be considered superior to measures of financial performance prepared in accordance with GAAP. In addition, our use of these non-GAAP financial measures may be different from similarly named measures used by other companies, limiting their usefulness for comparison purposes.

We review these non-GAAP financial measures as internal measures to evaluate our performance and manage our operations. We believe that these measures are useful performance measures which are used by us to facilitate a comparison of our on-going operating performance on a consistent basis from period-to-period. We believe that these non-GAAP financial measures provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone, as they exclude certain items that do not reflect the ordinary earnings of our operations. Our Board of Directors and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance, for evaluating on a quarterly and annual basis actual results against such expectations, and as a measure for performance incentive plans. We believe that the inclusion of Adjusted Earnings and Adjusted EBITDA results provides investors useful and important information regarding our operating results. We believe that Free Cash Flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements and assists investors in their understanding of our operating profitability and liquidity as we manage the business to maximize margin and cash flow.

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Adjusted Earnings (non-GAAP)

	13 weeks ended				26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Net income (loss)	$	22,528	$	7,515	$	(21,818)	$	(39,137)
Reconciling items, after-tax (below)	2,427		3,560		6,759		8,496
Adjusted Earnings (non-GAAP)	$	24,955	$	11,075	$	(15,059)	$	(30,641)
Reconciling items, pre-tax
Merchandise inventory loss (a)	$	—	$	—	434		—
Content amortization (non-cash)	1,311		1,222		2,586		2,386
Restructuring and other charges (a)	1,116		3,387		3,739		9,058
Reconciling items, pre-tax	2,427		4,609		6,759		11,444
Less: Pro forma income tax impact (a)(b)	—		1,049		—		2,948
Reconciling items, after-tax	$	2,427	$	3,560	$	6,759	$	8,496

(a)     See Management Discussion and Analysis and Results of Operations discussion above.

(b)    Represents the income tax effects of the non-GAAP items.

Adjusted EBITDA (non-GAAP)

	13 weeks ended				26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Net income (loss)	$	22,528	$	7,515	$	(21,818)	$	(39,137)
Add:
Depreciation and amortization expense	11,952		13,193		24,576		27,256
Interest expense, net	2,264		912		4,758		3,565
Income tax (benefit) expense	(203)		(1,694)		196		(16,610)
Merchandise inventory loss (a)	—		—		434		—
Content amortization (non-cash)	1,311		1,222		2,586		2,386
Restructuring and other charges (a)	1,116		3,387		3,739		9,058
Adjusted EBITDA (non-GAAP) (a)	$	38,968	$	24,535	$	14,471	$	(13,482)

(a)     See Management Discussion and Analysis and Results of Operations discussion above.

The following is Adjusted EBITDA by segment for the 13 and 26 weeks ended October 30, 2021 and October 31, 2020.

Adjusted EBITDA - by Segment	13 weeks ended October 30, 2021
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Elimination(b)		Total
Sales	$	608,952	$	21,669	$	8,279	$	—	$	(11,923)	$	626,977
Cost of sales (a)	480,022		16,049		167		—		(16,131)		480,107
Gross profit	128,930		5,620		8,112		—		4,208		$	146,870
Selling and administrative expenses	89,486		4,387		7,305		6,809		(85)		107,902
Adjusted EBITDA (non-GAAP)	$	39,444	$	1,233	$	807	$	(6,809)	$	4,293	$	38,968

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Adjusted EBITDA - by Segment	13 weeks ended October 31, 2020
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Elimination(b)		Total
Sales	$	576,514	$	36,387	$	5,947	$	—	$	(23,363)	$	595,485
Cost of sales (a)	480,810		25,673		255		—		(27,760)		478,978
Gross profit	95,704		10,714		5,692		—		4,397		116,507
Selling and administrative expenses	77,380		4,146		5,003		5,501		(58)		91,972
Adjusted EBITDA (non-GAAP)	$	18,324	$	6,568	$	689	$	(5,501)	$	4,455	$	24,535

Adjusted EBITDA - by Segment	26 weeks ended October 30, 2021
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Elimination(b)		Total
Sales	$	819,421	$	66,153	$	16,582	$	—	$	(34,385)	$	867,771
Cost of sales (a)	641,748		50,128		331		—		(33,044)		659,163
Gross profit	177,673		16,025		16,251		—		(1,341)		$	208,608
Selling and administrative expenses	157,851		8,378		13,752		14,253		(97)		194,137
Adjusted EBITDA (non-GAAP)	$	19,822	$	7,647	$	2,499	$	(14,253)	$	(1,244)	$	14,471

Adjusted EBITDA - by Segment	26 weeks ended October 31, 2020
Dollars in thousands	Retail		Wholesale		DSS		Corporate Services		Elimination(b)		Total
Sales	$	735,290	$	116,681	$	11,819	$	—	$	(64,291)	$	799,499
Cost of sales (a)	623,241		89,210		427		—		61,912		774,790
Gross profit	112,049		27,471		11,392		—		(2,379)		$	148,533
Selling and administrative expenses	134,365		7,937		9,039		10,745		(71)		162,015
Adjusted EBITDA (non-GAAP)	$	(22,316)	$	19,534	$	2,353	$	(10,745)	$	(2,308)	$	(13,482)

(a) For the 13 and 26 weeks ended October 30, 2021, the Retail Segment gross margin excludes $0.1 million and $0.3 million, respectively, of amortization expense (non-cash) related to content development costs. Additionally, for the 26 weeks ended October 30, 2021, gross margin excludes a merchandise inventory loss of $0.4 million in the Retail Segment related to the sale of our logo and emblematic general merchandise inventory below cost to FLC. For the 13 and 26 weeks ended October 31, 2020, the Retail Segment gross margin excludes $0.2 million and $0.4 million, respectively, of amortization expense (non-cash) related to content development costs.

For the 13 and 26 weeks ended October 30, 2021, the DSS Segment gross margin excludes $1.2 million and $2.3 million, respectively, of amortization expense (non-cash) related to content development costs. For the 13 and 26 weeks ended October 31, 2020, the DSS Segment gross margin excludes $1.0 million and $2.0 million, respectively of amortization expense (non-cash) related to content development costs.

(b)    See Management Discussion and Analysis and Results of Operations discussion above.

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Free Cash Flow (non-GAAP)

	13 weeks ended				26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Adjusted EBITDA (non-GAAP)	$	38,968	$	24,535	$	14,471	$	(13,482)
Less:
Capital expenditures (a)	9,894		9,142		21,264		16,197
Cash interest	1,980		1,240		3,662		3,200
Cash taxes	(8,032)		85		(7,778)		6,022
Free Cash Flow (non-GAAP)	$	35,126	$	14,068	$	(2,677)	$	(38,901)

(a) Purchases of property and equipment are also referred to as capital expenditures. Our investing activities consist principally of capital expenditures for contractual capital investments associated with renewing existing contracts, new store construction, digital initiatives and enhancements to internal systems and our website. The following table provides the components of total purchases of property and equipment:

Capital Expenditures	13 weeks ended				26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Physical store capital expenditures	$	3,587	$	2,825	$	7,480	$	5,962
Product and system development	3,856		2,901		7,480		5,226
Content development costs	1,865		1,752		4,712		2,828
Other	586		1,664		1,592		2,181
Total Capital Expenditures	$	9,894	$	9,142	$	21,264	$	16,197

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Liquidity and Capital Resources

Our primary sources of cash are net cash flows from operating activities, funds available under our credit agreement and short-term vendor financing. As of October 30, 2021, we had $183.3 million outstanding borrowings under the Credit Agreement. See Financing Arrangements discussion below.

COVID-19 Business Impact

Our business experienced an unprecedented and significant negative impact as a result of COVID-19 related campus store closures. Beginning in March 2020, colleges and universities nationwide began to close their campuses in light of safety concerns and as a result of local and state issued stay-at-home orders. By mid-March, during our Fiscal 2020 fourth quarter, we closed the majority of our physical campus stores to protect the health and safety of our customers and employees.

While our campus stores were closed, we continued to serve institutions and students through our campus websites, providing free shipping on all orders and an expanded digital content offering to provide immediate access to course materials to students at our campuses that closed due to COVID-19. We developed and implemented plans to safely reopen our campus stores based on national, state and local guidelines, as well as the campus policies set by the school administration.

Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and the effect on our ability to source products, including textbooks and general merchandise offerings. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to determine how to operate our bookstores in the safest manner for our employees and customers. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. For additional information, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

We believe that our future cash from operations, access to borrowings under the Credit Facility, FILO Facility and short-term vendor financing will provide adequate resources to fund our operating and financing needs for the foreseeable future. Our future capital requirements will depend on many factors, including, but not limited to, the economy and the outlook for and pace of sustainable growth in our markets, the levels at which we maintain inventory, the number and timing of new store openings, and any potential acquisitions of other brands or companies including digital properties. To the extent that available funds are insufficient to fund our future activities, we may need to raise additional funds through public or private financing of debt or equity. Our access to, and the availability of, financing in the future will be impacted by many factors, including the liquidity of the overall capital markets and the current state of the economy. There can be no assurances that we will have access to capital markets on acceptable terms.

Sources and Uses of Cash Flow

	26 weeks ended
Dollars in thousands	October 30, 2021		October 31, 2020
Cash, cash equivalents, and restricted cash at beginning of period	$	16,814	$	9,008
Net cash flows provided by operating activities	24,142		91,386
Net cash flows used in investing activities	(20,804)		(16,194)
Net cash flows provided by (used in) financing activities	3,378		(76,081)
Cash, cash equivalents, and restricted cash at end of period	$	23,530	$	8,119

As of October 30, 2021 and October 31, 2020, we had restricted cash of $12.5 million and $0.8 million, respectively, comprised of $11.6 million and $0, respectively, in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the FLC Partnership's merchandising agreement and $0.9 million and $0.8 million, respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

Cash Flow from Operating Activities

Our business is highly seasonal. For our retail operations, cash flows from operating activities are typically a source of cash in the second and third fiscal quarters, when students generally purchase and rent textbooks and other course materials for the upcoming semesters based on the typical academic semester. For our wholesale operations, cash flows from operating activities

39

are typically a source of cash in the second and fourth fiscal quarters, as payments are received from the summer and winter selling season when they sell textbooks and other course materials for retail distribution. For both retail and wholesale, cash flows from operating activities are typically a use of cash in the fourth fiscal quarter, when sales volumes are materially lower than the other quarters. For our DSS segment, cash flows are not seasonal as cash flows from operating activities are typically consistent throughout the year. Our quarterly cash flows also may fluctuate depending on the timing of the start of the various school’s semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods.

Cash flows provided by operating activities during the 26 weeks ended October 30, 2021 were $24.1 million compared to $91.4 million during the 26 weeks ended October 31, 2020. This decrease in cash used in operating activities of $67.3 million was primarily due to changes in working capital, including higher accounts receivables and higher inventory purchases, partially offset by higher earnings of $17.3 million in the current year period compared to the prior year period and lower tax payments of $13.8 million compared to the prior year period as discussed below. Our operations were highly impacted by COVID-19 related campus store closures in the prior year period, resulting in lower operating costs and lower inventory purchases.

Cash Flow from Investing Activities

Cash flows used in investing activities during the 26 weeks ended October 30, 2021 were $(20.8) million compared to $(16.2) million during the 26 weeks ended October 31, 2020. The increase in cash used in investing activities is primarily due to higher capital expenditures and contractual capital investments associated with content development, digital initiatives, enhancements to internal systems and websites, renewing existing contracts and new store construction. Capital expenditures totaled $21.3 million and $16.2 million during the 26 weeks ended October 30, 2021 and October 31, 2020, respectively.

Cash Flow from Financing Activities

Cash flows provided by financing activities during the 26 weeks ended October 30, 2021 were $3.4 million compared to cash flows used in financing activities of $(76.1) million during the 26 weeks ended October 31, 2020. This net change of $79.5 million is primarily due to higher net borrowings under the credit agreement.

Financing Arrangements

We have a credit agreement (the “Credit Agreement”), amended March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a 5-year asset-backed revolving credit facility in an aggregate committed principal amount of $400 million (the “Credit Facility”). We have the option to request an increase in commitments under the Credit Facility of up to $100 million, subject to certain restrictions. Proceeds from the Credit Facility are used for general corporate purposes, including seasonal working capital needs. The agreement includes an incremental first in, last out seasonal loan facility (the “FILO Facility”) for a $100 million incremental facility maintaining the maximum availability under the Credit Agreement at $500 million. On March 31, 2021, we were granted a waiver to the availability test condition to the current draw under the FILO Facility.

During the 26 weeks ended October 30, 2021, we borrowed $259.7 million and repaid $254.0 million under the Credit Agreement, with $183.3 million of outstanding borrowings as of October 30, 2021, comprised entirely of borrowings under the Credit Facility. During the 26 weeks ended October 31, 2020, we borrowed $330.8 million and repaid $406.0 million under the Credit Agreement, with $99.5 million of outstanding borrowings as of October 31, 2020, comprised entirely of outstanding borrowings under the Credit Facility. As of both October 30, 2021 and October 31, 2020, we have issued $4.8 million in letters of credit under the Credit Facility.

For additional information including interest terms and covenant requirements related to the Credit Facility and FILO Facility, refer to Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Income Tax Implications on Liquidity

As of October 30, 2021, other long-term liabilities includes $25.3 million related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index ("CPI") and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle. At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $0.7 million of the income taxes associated with the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could become payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months.

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We have filed our federal income tax returns for the tax year ended January 2021, as well claims for refunds for cash taxes paid in prior years. We received a $7.8 million refund in the second quarter of Fiscal 2022 and expect to receive an additional refunds of approximately $22.6 million.

Share Repurchases

On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50 million, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 13 weeks ended October 30, 2021, we did not repurchase any of our Common Stock under the stock repurchase program. As of October 30, 2021, approximately $26.7 million remains available under the stock repurchase program.

During the 26 weeks ended October 30, 2021, we repurchased 238,170 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Contractual Obligations

Our projected contractual obligations are consistent with amounts disclosed in Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Off-Balance Sheet Arrangements

As of October 30, 2021, we have no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.

Critical Accounting Policies

Our policies regarding the use of estimates and other critical accounting policies are consistent with the disclosures in Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Disclosure Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and information relating to us and our business that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and similar expressions, as they relate to us or our management, identify forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Such statements reflect our current views with respect to future events, the outcome of which is subject to certain risks, including, among others:

•risks associated with COVID-19 and the governmental responses to it, including its impacts across our businesses on demand and operations, as well as on the operations of our suppliers and other business partners, and the effectiveness of our actions taken in response to these risks;

•general competitive conditions, including actions our competitors and content providers may take to grow their businesses;

•a decline in college enrollment or decreased funding available for students;

•decisions by colleges and universities to outsource their physical and/or online bookstore operations or change the operation of their bookstores;

•implementation of our digital strategy may not result in the expected growth in our digital sales and/or profitability;

•risk that digital sales growth does not exceed the rate of investment spend;

•the performance of our online, digital and other initiatives, integration of and deployment of, additional products and services including new digital channels, and enhancements to higher education digital products, and the inability to achieve the expected cost savings;

41

•the risk of price reduction or change in format of course materials by publishers, which could negatively impact revenues and margin;

•the general economic environment and consumer spending patterns;

•decreased consumer demand for our products, low growth or declining sales;

•the strategic objectives, successful integration, anticipated synergies, and/or other expected potential benefits of various acquisitions, may not be fully realized or may take longer than expected;

•the integration of the operations of various acquisitions into our own may also increase the risk of our internal controls being found ineffective;

•changes to purchase or rental terms, payment terms, return policies, the discount or margin on products or other terms with our suppliers;

•our ability to successfully implement our strategic initiatives including our ability to identify, compete for and execute upon additional acquisitions and strategic investments;

•risks associated with operation or performance of MBS Textbook Exchange, LLC’s point-of-sales systems that are sold to college bookstore customers;

•technological changes;

•risks associated with counterfeit and piracy of digital and print materials;

•our international operations could result in additional risks;

•our ability to attract and retain employees;

•risks associated with data privacy, information security and intellectual property;

•trends and challenges to our business and in the locations in which we have stores;

•non-renewal of managed bookstore, physical and/or online store contracts and higher-than-anticipated store closings;

•disruptions to our information technology systems, infrastructure and data due to computer malware, viruses, hacking and phishing attacks, resulting in harm to our business and results of operations;

•disruption of or interference with third party web service providers and our own proprietary technology;

•work stoppages or increases in labor costs;

•possible increases in shipping rates or interruptions in shipping service;

•product shortages, including decreases in the used textbook inventory supply associated with the implementation of publishers’ digital offerings and direct to student textbook consignment rental programs, as well as the risks associated with the impacts that public health crises may have on the ability of our suppliers to manufacture or source products, particularly from outside of the United States;

•changes in domestic and international laws or regulations, including U.S. tax reform, changes in tax rates, laws and regulations, as well as related guidance;

•enactment of laws or changes in enforcement practices which may restrict or prohibit our use of texts, emails, interest based online advertising, recurring billing or similar marketing and sales activities;

•the amount of our indebtedness and ability to comply with covenants applicable to any future debt financing;

•our ability to satisfy future capital and liquidity requirements;

•our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;

•adverse results from litigation, governmental investigations, tax-related proceedings, or audits;

•changes in accounting standards; and

•the other risks and uncertainties detailed in the section titled “Risk Factors” in Part I - Item 1A in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Form 10-Q. 

Item 3:    Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the items discussed in Part II - Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

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Item 4:    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation (as required under Rules 13a-15(b) and 15d-15(b) under the Exchange Act) was performed under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

Management has not identified any changes in the Company’s internal control over financial reporting that occurred during the second quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters. We record a liability when we believe that it is both probable that a loss has been incurred and the amount of loss can be reasonably estimated. Based on our current knowledge, we do not believe that there is a reasonable possibility that the final outcome of any pending or threatened legal proceedings to which we or any of our subsidiaries are a party, either individually or in the aggregate, will have a material adverse effect on our future financial results. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. As such, there can be no assurance that the final outcome of these matters will not materially and adversely affect our business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes during the 26 weeks ended October 30, 2021 to the risk factors discussed in Part I - Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information as of October 30, 2021 with respect to shares of Common Stock we purchased during the second quarter of Fiscal 2022:

Period	Total Number of Shares Purchased	Average Price Paid per Share (a)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
August 1, 2021 - August 28, 2021	—	$	—	—	$	26,669,324
August 29, 2021 - October 2, 2021	—	$	—	—	$	26,669,324
October 3, 2021 - October 30, 2021	—	$	—	—	$	26,669,324
	—	$	—	—

(a)     This amount represents the average price paid per common share. This price includes a per share commission paid for all repurchases.

On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50 million, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 26 weeks ended October 30, 2021, we did not repurchase any shares of our Common Stock under the program.

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During the 26 weeks ended October 30, 2021, we repurchased 238,170 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Item 5. Other Information

None

Item 6.    Exhibits

10.1	Barnes & Noble Education, Inc. Amended and Restated Equity Incentive Plan, amended and restated as of September 23, 2021.
31.1	Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BARNES & NOBLE EDUCATION, INC.
(Registrant)
By:	/S/ THOMAS D. DONOHUE
	Thomas D. Donohue
	Chief Financial Officer
	(principal financial officer)
By:	/S/ SEEMA C. PAUL
	Seema C. Paul
	Chief Accounting Officer
	(principal accounting officer)

November 30, 2021

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EX-10.1

Exhibit 10.1

BARNES & NOBLE EDUCATION, INC. AMENDED AND RESTATED
EQUITY INCENTIVE PLAN

[as amended and restated on September 23, 2021 at the 2021 Annual Meeting of Stockholders to increase authorized shares by 3,000,000]

BARNES & NOBLE EDUCATION, INC., a corporation existing under the laws of the State of Delaware, together with any successor thereto (the “Company”), hereby establishes and adopts the following Equity Incentive Plan (the “Plan”). Certain capitalized terms used in the Plan are defined in Article 2.

RECITALS

WHEREAS, the Company desires to encourage high levels of performance by those individuals who are key to the success of the Company, to attract new individuals who are highly motivated and who are expected to contribute to the success of the Company and to encourage such individuals to remain as non-employee directors, employees, consultants and/or advisors of the Company and its Affiliates by increasing their proprietary interest in the Company’s growth and success; and

WHEREAS, to attain these ends, the Company has formulated the Plan embodied herein to authorize the granting of Awards to Participants whose judgment, initiative and efforts are or have been or are expected to be responsible for the success of the Company.

NOW, THEREFORE, the Company hereby constitutes, establishes and adopts the following Plan and agrees to the following provisions:

ARTICLE 1

PURPOSE OF THE PLAN

1.1. Purpose. The purpose of the Plan is to assist the Company and its Affiliates in attracting and retaining selected individuals to serve as non-employee directors, employees, consultants and/or advisors of the Company and its Affiliates who are expected to contribute to the Company’s success and to achieve long-term objectives which will inure to the benefit of all stockholders of the Company through the additional incentives inherent in the Awards hereunder.

ARTICLE 2

DEFINITIONS

2.1. “Affiliate” shall mean (i) any person or entity that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company (including any Subsidiary) or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.

2.2. “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Performance Award, Other Stock Unit Award or any other right, interest or option relating to Shares or other property (including cash) granted pursuant to the provisions of the Plan.

2.3. “Award Agreement” shall mean any written or electronic agreement, contract or other instrument or document evidencing any Award granted by the Committee hereunder.

2.4. “Board” shall mean the board of directors of the Company.

2.5. “Change of Control” shall (a) have the meaning set forth in an Award Agreement; provided, however, that any definition of Change of Control set forth in an Award Agreement shall provide that a Change of Control shall not occur until consummation or effectiveness of a change of control of the Company, rather than upon the announcement, commencement, stockholder approval or other potential occurrence of any event or transaction that, if completed, would result in a change of control of the Company, or (b) if there is no definition set forth in an Award Agreement, mean the occurrence of any of the following events:

(i) during any period of 24 consecutive months, individuals who were Directors of the Company on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a Director of the Company subsequent to the first day of such period whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director;

(ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) the Company or (y) any of its Subsidiaries, but in the case of this clause (y) only if Company Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of the Company to an entity that is not an Affiliate (a “Sale”), in each case, if such Reorganization or Sale requires the approval of the Company’s stockholders under the law of the Company’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of the Company in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote for the election of the Board (“Company Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including a corporation that, as a result of such transaction, owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Company Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than the Company), (2) no “person” (as such term is used in Section 13(d) of the Exchange Act) (each, a “Person”) (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation or (y) the Riggio Stockholders) beneficially owns, directly or indirectly, 40% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale; or

(iii) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or an Affiliate, (C) any entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the voting power of the Company Voting Securities or (D) the Riggio Stockholders) becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company Voting Securities; provided, however, that for purposes of this subparagraph (iii), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by any employee

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benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate, (y) any acquisition by an underwriter temporarily holding such Company Voting Securities pursuant to an offering of such securities or any acquisition by a pledgee of Company Voting Securities holding such securities as collateral or temporarily holding such securities upon foreclosure of the underlying obligation or (z) any acquisition pursuant to a Reorganization or Sale that does not constitute a Change of Control for purposes of subparagraph (ii) above.

The determination as to the occurrence of a Change of Control shall be based on objective facts and, to the extent applicable, in accordance with the requirements of Code Section 409A and the regulations promulgated thereunder.

2.6. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

2.7. “Committee” shall mean the Compensation Committee of the Board (or such other committee designated by the Compensation Committee of the Board).

2.8. “Company” has the meaning set forth in introductory paragraph of the Plan.

2.9. “Director” shall mean a non-employee member (including any prospective non-employee member) of the Board or a non-employee member (including any prospective non-employee member) of the board of directors of a Subsidiary.

2.10. “Director Award Limitations” shall have the meaning set forth in Section 4.3.

2.11. “Distribution” shall mean the distribution by Barnes & Noble, Inc., a Delaware corporation, to its stockholders of all Shares.

2.12. “ “Employee” shall mean any employee (including any prospective employee) of the Company or any Affiliate. Solely for purposes of the Plan, an Employee shall also mean any consultant or advisor (or prospective consultant or advisor) who provides services to the Company or any Affiliate, so long as such person (i) renders bona fide services that are not in connection with the offer and sale of the Company’s securities in a capital-raising transaction and (ii) does not directly or indirectly promote or maintain a market for the Company’s securities.

2.13. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2.14. “Fair Market Value” shall mean, with respect to any property other than Shares, the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. The Fair Market Value of Shares as of any date shall be the per Share closing price of the Shares as reported on the New York Stock Exchange on that date (or if there was no reported closing price on such date, on the last preceding date on which the closing price was reported) or, if the Company is not then listed on the New York Stock Exchange, the per Share closing price of the Shares as reported on an established securities market (within the meaning of Treasury Regulations Section 1.897-1(m)) on which the Shares are traded. If the Company is not listed on an established securities market (within the meaning of Treasury Regulations Section 1.897-1(m)), the Fair Market Value of Shares shall be determined by the Committee in its sole discretion using appropriate criteria. Notwithstanding the foregoing, the Fair Market Value of Shares shall, in all events, be determined in accordance with Code Section 409A.

2.15. “ISO Limitation” shall have the meaning set forth in Section 5.7.

2.16. “Limitations” shall mean, collectively, (i) the Plan Share Limitation, (ii) the Director Award Limitations, (iii) the Participant Award Limitations, and (iv) the ISO Limitation.

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2.17. “Option” shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.

2.18. “Other Stock Unit Award” shall have the meaning set forth in Section 8.1.

2.19. “Participant” shall mean an Employee or Director who is selected by the Committee to receive an Award under the Plan.

2.20. “Participant Award Limitations” shall have the meaning set forth in Section 4.3.

2.21. “Payee” shall have the meaning set forth in Section 12.1.

2.22. “Performance Award” shall mean any Award of Performance Shares or Performance Units granted pursuant to Article 9.

2.23. “Performance Period” shall mean one or more periods of time not less than one fiscal year, as the Committee may select, over which the attainment of one or more performance goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Award, in each case, established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.

2.24. “Performance Share” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

2.25. “Performance Unit” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated amount of property (including cash) other than Shares, which value may be paid to the Participant by delivery of Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

2.26. “Permitted Assignee” shall have the meaning set forth in Section 11.3.

2.27. “Plan Share Limitation” shall have the meaning set forth in Section 3.1.

2.28. “Restricted Stock” shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to receive any dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

2.29. “Restricted Period” shall have the meaning set forth in Section 7.1.

2.30. “Restricted Stock Award” shall have the meaning set forth in Section 7.1.

2.31. “Riggio Stockholders” shall mean Leonard Riggio, his spouse, his lineal descendants, trusts for the exclusive benefit of any such individuals, the executor or administrator of the estate or the legal representative of any of such individuals and any entity controlled by any of the foregoing Persons.

2.32. “Shares” shall mean the shares of common stock of the Company, par value $0.01 per share.

4

2.33. “Stock Appreciation Right” shall mean the right granted to a Participant pursuant to Article 6.

2.34. “Subsidiary” shall mean any entity in which the Company, directly or indirectly, possesses fifty percent (50%) or more of the total combined voting power of all classes of its stock or similar equity interests.

2.35. “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

2.36. “Treasury Regulations” shall mean the federal income tax regulations promulgated under the Code.

ARTICLE 3

SHARES SUBJECT TO THE PLAN

3.1. Number of Shares. (a) Subject to adjustment as provided in Section 11.2, a total of 13,409,345 Shares shall be authorized for grant under the Plan (the “Plan Share Limitation”).

(b) If any Shares subject to an Award are forfeited, expire or otherwise terminate without issuance of such Shares, or any Award is settled for cash or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for Awards under the Plan. Awards that are required to be settled in cash will not reduce the Plan Share Limitation.

(c) If Shares issued upon vesting or settlement of an Award other than an Option or Stock Appreciation Right, or Shares owned by a Participant, are surrendered or tendered to the Company in payment of any taxes required to be withheld in respect of such Award, in each case, in accordance with the terms and conditions of the Plan and any applicable Award Agreement, such surrendered or tendered Shares shall again become available to be delivered pursuant to Awards under the Plan; provided, however, that in no event shall such Shares increase the ISO Limitation and, for the avoidance of doubt, no Shares that are surrendered or tendered to the Company in payment of the exercise price of an Option or any taxes required to withheld in respect of an Option or Stock Appreciation Right shall again become available to be delivered pursuant to Awards granted under the Plan.

(d) Substitute Awards shall not reduce the Shares authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for issuance under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors or employees, other service providers or non-employee directors of any Affiliate prior to such acquisition or combination.

3.2. Character of Shares. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise.

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ARTICLE 4

ELIGIBILITY AND ADMINISTRATION

4.1. Eligibility. Any Employee or Director shall be eligible to be selected as a Participant.

4.2. Administration. (a) The Plan shall be administered by the Committee. The Board may remove from, add members to, or fill vacancies on, the Committee.

(b) The Committee shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Employees and Directors to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Awards, not inconsistent with the provisions of the Plan, to be granted to each Participant hereunder; (iii) determine the number of Shares or dollar value to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder (including when and under what circumstances Awards shall vest, become exercisable or be paid or settled, subject to Section 4.4) and, if certain performance goals must be attained in order for an Award to vest or be settled or paid, establish such performance goals and determine in its sole discretion whether, and to what extent, such performance goals have been attained); (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant; (vii) determine whether, to what extent and under what circumstances any Award shall be canceled or suspended; (viii) interpret and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award Agreement; (ix) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall deem desirable to carry it into effect; (x) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) subject to Sections 8.1 and 9.1, determine whether dividends on the shares of Common Stock underlying any Award will accumulate; (xii) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards, (xiii) amend an outstanding Award or grant a replacement Award for an Award previously granted under the Plan if, in its sole discretion, the Committee determines that (A) the tax consequences of such Award to the Company or the Participant differ from those consequences that were expected to occur on the date the Award was granted or (B) clarifications or interpretations of, or changes to, tax law or regulations permit Awards to be granted that have more favorable tax consequences than initially anticipated; and (xiv) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.

(c) Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Participant, any stockholder and any Employee or any Affiliate. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings. Notwithstanding the foregoing or anything else to the contrary in the Plan, any action or determination by the Committee specifically affecting or relating to an Award to a member of the Committee shall require the prior approval of the Board if the Award is not comparable and consistent with Awards to Directors who are not members of the Committee. The full Board may, in its sole discretion, at any time and from time to time, grant Awards to any Director or administer the Plan with respect to such Awards. In any such case, the Board shall have all the power and authority granted to the Committee herein.

(d) The Committee may delegate to a committee of one or more non-employee directors of the Company or, to the extent permitted by law, to one or more officers or a committee of officers the right to grant Awards to Employees who are not Directors or officers of the Company and to cancel or suspend Awards to Employees who are not Directors or officers of the Company. Such delegation shall be subject to the requirements of Rule 16b-3 of the Exchange Act and the rules of the New York Stock Exchange.

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4.3. Award Limitations. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any Director, together with any amounts paid to such Directors for annual and committee retainer fees, during any 12-month period shall not exceed $700,000 (the “Director Award Limitations”). Subject to adjustment as provided in Section 11.2, no Participant shall be granted during any 12 month period, Awards with respect to more than 1,500,000 shares of Common Stock in the aggregate (the “Participant Award Limitations”).

4.4. Minimum Vesting Requirements. Notwithstanding any other provision of the Plan to the contrary, equity-based Awards granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted (excluding, for this purpose, any (A) Substitute Awards, (B) shares delivered in lieu of fully vested cash Awards and (C) Awards to non-employee directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of shareholders (provided that such vesting period may not be less than 50 weeks after grant)); provided, that, the Committee may grant equity-based Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 3.1 (subject to adjustment under Section 11.2); and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award, including in cases of retirement, death or a Change in Control (in accordance with Section 10), in the terms of the Award or otherwise.

ARTICLE 5

OPTIONS

5.1. Grant of Options. Subject to the Limitations, Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option shall be subject to the terms and conditions of this Article 5 and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable. The provisions of Options need not be the same with respect to each recipient.

5.2. Award Agreements. All Options granted pursuant to this Article 5 shall be evidenced by a written or electronic Award Agreement in such form and containing such terms and conditions as the Committee shall determine which are not inconsistent with the provisions of the Plan. Granting of an Option pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any individual who is granted an Option pursuant to this Article 5 may hold more than one Option granted pursuant to the Plan at the same time. The Committee may provide in the Award Agreement relating to an Option that such Option will be automatically exercised, without further action required by the holder, on the last day of such Option’s exercise period if, on such day, the Fair Market Value of the Shares to be acquired pursuant to an exercise of such Option exceeds the aggregate option price payable to exercise such Option.

5.3. Option Price. Other than in connection with Substitute Awards, the option price per each Share purchasable under any Option granted pursuant to this Article 5 shall not be less than 100% of the Fair Market Value of such Share on the date of grant of such Option. Other than pursuant to Section 12.2, the Committee shall not be permitted to (a) lower the option price per Share of an Option after it is granted, (b) cancel an Option (at a time when the option price per Share exceeds the Fair Market Value of the underlying Shares) in exchange for another Award or cash (other than in connection with a “change of control” of the Company), and (c) take any other action with respect to an Option that may be treated as a repricing under the rules and regulations of the New York Stock Exchange.

5.4. Option Period. The term of each Option shall be fixed by the Committee in its sole discretion; provided that no Option shall be exercisable after the expiration of ten years from the date the Option is granted.

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5.5. Exercise of Options. Vested Options granted under the Plan shall be exercised by the Participant or by a Permitted Assignee thereof (or by the Participant’s executors, administrators, guardian or legal representative, as may be provided in an Award Agreement) as to all or part of the Shares covered thereby, by the giving of written notice of exercise to the Company or its designated agent, specifying the number of Shares to be purchased, accompanied by payment of the full purchase price for the Shares being purchased. Unless otherwise provided in an Award Agreement, full payment of such purchase price shall be made at the time of exercise and shall be made (a) in cash or by certified check or bank check or wire transfer of immediately available funds, (b) by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value), (c) with the consent of the Committee, by delivery of other consideration having a Fair Market Value on the exercise date equal to the total purchase price, (d) with the consent of the Committee, by withholding Shares otherwise issuable in connection with the exercise of the Option, (e) through any other method specified in an Award Agreement, or (f) any combination of any of the foregoing. In connection with a tender of previously acquired Shares pursuant to clause (b) above, the Committee, in its sole discretion, may permit the Participant to constructively exchange Shares already owned by the Participant in lieu of actually tendering such Shares to the Company, provided that adequate documentation concerning the ownership of the Shares to be constructively tendered is furnished in form satisfactory to the Committee. The notice of exercise, accompanied by such payment, shall be delivered to the Company at its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a Share. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such issuance.

5.6. Form of Settlement. In its sole discretion, the Committee may provide, at the time of grant, that the Shares to be issued upon an Option’s exercise shall be in the form of Restricted Stock or other similar securities, or may reserve the right so to provide after the time of grant.

5.7. Incentive Stock Options. With respect to the Options that may be granted by the Committee under the Plan, the Committee may grant Options intended to qualify as “incentive stock options” as defined in Section 422 of the Code, to any employee of the Company or any Affiliate, subject to the requirements of Section 422 of the Code. Notwithstanding anything in Section 3.1 to the contrary and solely for the purposes of determining whether Shares are available for the grant of “incentive stock options” under the Plan, the maximum aggregate number of Shares with respect to which “incentive stock options” may be granted under the Plan shall be 1,204,673 Shares (the “ISO Limitation”).

ARTICLE 6

STOCK APPRECIATION RIGHTS

6.1. Grant and Exercise. Subject to the Limitations, the Committee may provide Stock Appreciation Rights either alone or in addition to other Awards granted under the Plan.

6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:

(a) Upon the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the base price of the right on the date of grant, as specified by the Committee in its sole discretion, which, except in the case of Substitute Awards or in connection with an adjustment provided in Section 11.2, shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be. The Committee may provide in the Award Agreement relating to a Stock Appreciation Right that such Stock Appreciation Right will be automatically exercised, without further action required by the holder, on the last day of such Stock Appreciation Right’s exercise period if, on

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such day, the Fair Market Value of the Shares to which such Stock Appreciation Right relates exceeds the aggregate base price of such rights on their date of grant.

(b) Upon the exercise of a Stock Appreciation Right, the Committee shall determine in its sole discretion whether payment shall be made in cash, in whole Shares or other property, or any combination thereof.

(c) The provisions of Stock Appreciation Rights need not be the same with respect to each recipient.

(d) The Committee may impose such other conditions or restrictions on the terms of exercise and the base price of any Stock Appreciation Right, as it shall deem appropriate. Notwithstanding the foregoing provisions of this Section 6.2(d), but subject to Section 11.2, a Stock Appreciation Right shall not have (i) a base price less than Fair Market Value on the date of grant, or (ii) a term of greater than ten years. In addition to the foregoing, other than pursuant to Section 11.2, the Committee shall not be permitted to (A) reduce the base price of any Stock Appreciation Right after it is granted, (B) cancel any Stock Appreciation Right (at a time when the base price per Share exceeds the Fair Market Value of the underlying Shares) in exchange for another Award or cash (other than in connection with a “change of control” of the Company), and (C) take any other action with respect to a Stock Appreciation Right that may be treated as a repricing under the rules and regulations of the New York Stock Exchange.

(e) The Committee may impose such terms and conditions on Stock Appreciation Rights granted in conjunction with any Award (other than an Option) as the Committee shall determine in its sole discretion.

ARTICLE 7

RESTRICTED STOCK AWARDS

7.1. Grants. Subject to the Limitations, Awards of Restricted Stock may be issued hereunder to Participants either alone or in addition to other Awards granted under the Plan (a “Restricted Stock Award”). A Restricted Stock Award shall be subject to restrictions imposed by the Committee covering a period of time specified by the Committee (the “Restriction Period”). The provisions of Restricted Stock Awards need not be the same with respect to each recipient. The Committee has absolute discretion to determine whether any consideration (other than services) is to be received by the Company or any Affiliate as a condition precedent to the issuance of Restricted Stock.

7.2. Award Agreements. The terms of any Restricted Stock Award granted under the Plan shall be set forth in a written or electronic Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan.

7.3. Rights of Holders of Restricted Stock. Beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant shall become a stockholder of the Company with respect to all Shares subject to the Award Agreement and shall have all of the rights of a stockholder, including, except as set forth in this Section 7.3, the right to vote such Shares and the right to receive distributions made with respect to such Shares; however, subject to compliance with Code Section 409A, any dividends otherwise payable with respect to a Restricted Stock Award shall not be paid currently but shall be accumulated until the applicable Restricted Stock Award has vested. Furthermore, notwithstanding any provisions of the Plan to the contrary, in the case of Restricted Stock Awards that are subject to vesting based on the achievement of performance goals, a Participant shall not be entitled to receive payment for any dividends with respect to such Restricted Stock Awards unless, until and except to the extent that the applicable performance goals are achieved or are otherwise deemed to be satisfied. In any event, any Shares or any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Stock as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Restricted Stock.

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ARTICLE 8

OTHER STOCK UNIT AWARDS

8.1. Stock and Administration. Subject to the Limitations, other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or other property (“Other Stock Unit Awards”) may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan, and such Other Stock Unit Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan. Other Stock Unit Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee at the time of payment. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees and Directors to whom and the time or times at which such Other Stock Unit Awards shall be made, the number of Shares to be granted pursuant to such Awards, and all other conditions of the Awards. The provisions of Other Stock Unit Awards need not be the same with respect to each recipient. Subject to compliance with Code Section 409A, any dividends otherwise payable with respect to an Other Stock Unit Award shall not be paid currently but shall be accumulated until the applicable Other Stock Unit Award has vested. Furthermore, notwithstanding any provision of the Plan to the contrary, in the case of Other Stock Unit Awards that are subject to vesting based on the achievement of performance goals, a Participant shall not be entitled to receive payment for any dividends with respect to such Other Stock Unit Awards unless, until and except to the extent that the applicable performance goals are achieved or are otherwise deemed to be satisfied.

8.2. Terms and Conditions. Shares (including securities convertible into Shares) subject to Awards granted under this Article 8 may be issued for no consideration or for such minimum consideration as may be required by applicable law. Shares (including securities convertible into Shares) purchased pursuant to a purchase right awarded under this Article 8 shall be purchased for such consideration as the Committee shall determine in its sole discretion.

ARTICLE 9

PERFORMANCE AWARDS

9.1. Terms of Performance Awards. Subject to the Limitations, Performance Awards may be issued hereunder to Participants, for no consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance goals to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award. The provision of Performance Awards need not be the same with respect to each Participant. Except as provided in Article 10 or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in Section 9.2 or such other criteria as the Committee deems appropriate. The amount of the Award to be distributed shall be conclusively determined by the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis. Notwithstanding any provision of the Plan to the contrary, a Participant shall not be entitled to receive payment for any dividends with respect to any Performance Awards unless, until and except to the extent that the performance goals applicable to such Performance Awards are achieved or are otherwise deemed to be satisfied.

9.2. Performance Goals. The performance goals to be determined by the Compensation Committee in establishing the terms of Performance Awards shall relate to the attainment of a specified level of performance of one or more performance criteria established by the Committee, which may include, but are not limited any of the following: sales (including same store or comparable sales); net sales; return on sales; cash flow (including operating cash flow and free cash flow); cash flow per Share (before or after dividends); cash flow return on investment; cash flow return on capital; pretax income

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before allocation of corporate overhead and bonus; earnings per share; net income; division, group or corporate financial goals or ratios including those measuring liquidity, activity, profitability or leverage; return on stockholders’ equity; total stockholder return; return on assets; attainment of strategic and operational initiatives; appreciation in and/or maintenance of the price of the Shares or any other publicly-traded securities of the Company; market share; customer satisfaction; customer growth; user time spent online; unique users; registered users; user frequency; user retention; web page views; employee satisfaction; employee turnover; productivity or productivity ratios; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property; establishing relationships with commercial entities with respect to the marketing, distribution and sale of the Company’s products (including with group purchasing organizations, distributors and other vendors); supply chain achievements (including establishing relationships with manufacturers or suppliers of component materials and manufacturers of the Company’s products); co-development, co-marketing, profit sharing, joint venture or other similar arrangements); gross profits; gross or net profit margin; operating margin; gross profit growth; year-end cash; cash margin; revenue; net revenue; product revenue or system-wide revenue (including growth of such revenue measures); operating earnings; operating income; earnings before taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; economic value-added models; comparisons with various stock market indices; regulatory achievements (including submitting or filing applications or other documents with regulatory authorities or receiving approval of any such applications or other documents and passing pre-approval inspections (whether of the Company or the Company’s third-party manufacturer) and validation of manufacturing processes (whether the Company’s or the Company’s third-party manufacturer’s)); improvement in or attainment of expense levels or working capital levels, including cash, inventory and accounts receivable; general and administrative expense savings; inventory control; operating efficiencies; average inventory; inventory turnover; inventory shrinkage; cost of capital or assets under management; financing and other capital raising transactions (including sales of the Company’s equity or debt securities; debt level year-end cash position; book value; factoring transactions; competitive market metrics; timely completion of new product roll-outs; timely launch of new facilities (such as new store openings, gross or net); sales or licenses of the Company’s assets, including its intellectual property, whether in a particular jurisdiction or territory or globally; or through partnering transactions); royalty income; implementation, completion or attainment of measurable objectives with respect to research, development, manufacturing, commercialization, products or projects, production volume levels, acquisitions and divestitures, succession and hiring projects, reorganization and other corporate transactions, expansions of specific business operations and meeting divisional or project budgets; factoring transactions; and recruiting and maintaining personnel; debt reduction; reductions in costs, and/or return on invested capital of the Company or any Affiliate, division or business unit of the Company for or within which the Participant is primarily employed. Such performance goals also may be based upon the relative performance of other companies or upon comparisons of any of the indicators of performance relative to other companies. When determining whether performance goals have been attained, the Committee will have the discretion to make adjustments to take into account extraordinary or nonrecurring items or events, or unusual nonrecurring gains or losses identified in the Company’s financial statements, and include or exclude the impact of an event or occurrence which the Committee determines should appropriately be excluded, including, but not limited to (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges or infrequently occurring items, (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, (c) a change in accounting standards required by generally accepted accounting principles, (d) asset write-downs, (e) litigation or claim judgments or settlements, (f) acquisitions or divestitures, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) tax law changes, (j) costs associated with refinancing or repurchase of bank loans or debt securities, (k) unbudgeted capital expenditures or (l) a business interruption event.

ARTICLE 10

CHANGE OF CONTROL PROVISIONS

10.1. Assumption Upon Change of Control. Unless otherwise provided in the Award Agreement evidencing the applicable Award, in the event of a Change of Control, if the successor company assumes or substitutes for an outstanding Award (or in which the Company is the ultimate

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parent corporation and continues the Award), then such Award shall be continued in accordance with its applicable terms and shall not be accelerated as described in Section 10.2. For the purposes of this Section 10.1, an Award shall be considered assumed or substituted for if, following the Change of Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change of Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change of Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change of Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Award, for each Share subject thereto, will be solely common stock of the successor company substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change of Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of a termination of a Participant’s employment in such successor company within a specified time period following such Change of Control, each Award held by such Participant at the time of the Change of Control shall be accelerated as described in Section 10.2. Notwithstanding the foregoing, no Award shall be assumed or substituted pursuant to this Section 10.1 if such action would cause an Award not otherwise “deferred compensation” within the meaning of Code Section 409A to become or create “deferred compensation” within the meaning of Code Section 409A.

10.2. Acceleration Upon Change of Control. Notwithstanding Section 10.1, and except as provided in the applicable Award Agreement, in the event of a Change of Control, unless provision is made in connection with the Change of Control for assumption or continuation of Awards previously granted or substitution of such Awards in accordance with Section 10.1, upon the Change of Control (a) Options and Stock Appreciation Rights outstanding as of the date of the Change of Control shall immediately vest and become fully exercisable, (b) restrictions on Restricted Stock shall lapse and the Restricted Stock shall become free of all restrictions and limitations and become fully vested, (c) all Performance Awards shall be considered to be earned and payable (either in full or pro-rata based on the portion of Performance Period completed as of the date of the Change of Control and at the level determined by the Committee), and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed, (d) the restrictions and other conditions applicable to any Other Stock Unit Awards or any other Awards shall lapse, and such Other Stock Unit Awards or such other Awards shall become free of all restrictions, limitations or conditions and become fully vested, and (e) such other additional benefits as the Committee deems appropriate shall apply, subject in each case to any terms and conditions contained in the Award Agreement evidencing such Award. Notwithstanding any provision of this Section 10.2, unless otherwise provided in the applicable Award Agreement, if any amount payable pursuant to an Award constitutes deferred compensation within the meaning of Code Section 409A, in the event of a Change of Control that does not qualify as an event described in Code Section 409A(a)(2)(A)(v), such Award (and any other Awards that constitute deferred compensation that vested prior to the date of such Change of Control but are outstanding as of such date) shall not be settled until the earliest permissible payment event under Code Section 409A following such Change of Control. Notwithstanding any other provision of the Plan, the Committee, in its discretion, may determine that, upon the occurrence of a Change of Control of the Company, (i) each Option and Stock Appreciation Right outstanding shall terminate within a specified number of days after notice to the Participant, and such Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such Share immediately prior to the occurrence of such Change of Control over the option or base price, as applicable, per Share of such Option and/or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine and (ii) each Option and Stock Appreciation Right outstanding at such time with an option or base price, as applicable, per Share that exceeds the Fair Market Value of such Share immediately prior to the occurrence of such Change of Control shall be canceled for no consideration.

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ARTICLE 11

GENERALLY APPLICABLE PROVISIONS

11.1. Amendment and Modification of the Plan. The Board may, from time to time, alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for stockholder approval imposed by applicable law, including the rules and regulations of the New York Stock Exchange or any rule or regulation of any stock exchange or quotation system on which Shares are listed or quoted; provided that the Board may not amend the Plan in any manner that would result in noncompliance with Rule 16b-3 of the Exchange Act; and further provided that the Board may not, without the approval of the Company’s stockholders, amend the Plan to (a) increase the number of Shares that may be the subject of Awards under the Plan (except for adjustments pursuant to Section 11.2), (b) expand the types of awards available under the Plan, (c) materially expand the class of persons eligible to participate in the Plan, (d) amend any provision of Section 5.3 or Section 6.2(d), (e) increase the maximum permissible term of any Option or Freestanding Stock Appreciation Right specified by Section 5.4 or Section 6.2(d), as applicable, or (f) amend the penultimate sentence of Section 11.3. In addition, no amendments to, or termination of, the Plan shall materially impair the rights of a Participant under any Award previously granted without such Participant’s consent, provided, however, that the Board may amend, modify or terminate the Plan without the consent of such Participant if it deems such action necessary to comply with applicable law, tax rules, stock exchange rules or accounting rules, provided such action affects the rights of all similarly situated Participants.

11.2. Adjustments. To prevent the dilution or enlargement of benefits or potential benefits intended to be made available under the Plan, in the event of any corporate transaction (including any Change of Control) or event such as a merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property), stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or the value thereof, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee, in its sole discretion, deems equitable or appropriate, including such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan, including each of the Plan Share Limitation and the ISO Limitation, and, in the aggregate or to any one Participant, in the number, class, kind and option or base price of securities subject to outstanding Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Committee may determine to be appropriate in its sole discretion; provided, however, that the number of Shares subject to any Award shall always be a whole number. Notwithstanding the foregoing, no Award shall be adjusted, substituted or otherwise modified pursuant to this Section 11.2 if such action would cause an Award not otherwise “deferred compensation” within the meaning of Code Section 409A to become or create “deferred compensation” within the meaning of Code Section 409A.

11.3. Transferability of Awards. Except as provided below, no Award and no Shares subject to Awards described in Article 8 that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution, and such Award may be exercised during the life of the Participant only by the Participant or the Participant’s guardian or legal representative. Notwithstanding the foregoing, a Participant may assign or transfer an Award with the consent of the Committee (each transferee thereof, a “Permitted Assignee”) to the Participant’s spouse, domestic partner and/or children (and/or trusts and/or partnerships established for the benefit of the Participant’s spouse, domestic partner and/or children or in which the Participant is a beneficiary or partner); provided that such Permitted Assignee(s) shall be bound by and subject to all of the terms and conditions of the Plan and the Award Agreement relating to the transferred Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant shall remain bound by the terms and conditions of the Plan. Notwithstanding the foregoing, in no event shall any Award (or any rights and obligations thereunder) be transferred to a third party in exchange for value unless such transfer is specifically approved by the Company’s stockholders. The Company shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section 11.3.

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11.4. Termination of Employment. The Committee shall determine and set forth in each Award Agreement whether any Awards granted in such Award Agreement will continue to be exercisable, and the terms of such exercise, on and after the date that a Participant ceases to be employed by or to provide services to the Company or any Affiliate (including as a Director), whether by reason of death, disability, voluntary or involuntary termination of employment or services, or otherwise. The date of termination of a Participant’s employment or services will be determined by the Committee, which determination will be final.

ARTICLE 12

MISCELLANEOUS

12.1. Tax Withholding. The Company shall have the right to make all payments or distributions pursuant to the Plan to a Participant (or a Permitted Assignee thereof) (any such person, a “Payee”) net of any applicable Federal, State and local taxes required to be paid or withheld as a result of (a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in connection with any Award or (e) any other event occurring pursuant to the Plan. The Company or any Affiliate shall have the right to withhold from wages or other amounts otherwise payable to such Payee such withholding taxes as may be required by law, or to otherwise require the Payee to pay such withholding taxes. If the Payee shall fail to make such tax payments as are required, the Company or its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Payee or to take such other action as may be necessary to satisfy such withholding obligations. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value) that have been owned for a period of at least six months (or such other period to avoid accounting charges against the Company’s earnings), or by directing the Company to retain Shares (up to the employee’s minimum required tax withholding rate or such other rate that will not cause adverse accounting consequences and is permitted under applicable Internal Revenue Service withholding rules) otherwise deliverable in connection with the Award.

12.2. Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of an Award hereunder shall confer upon any Employee or Director the right to continue in the employment or service of the Company or any Affiliate or affect any right that the Company or any Affiliate may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such Employee or Director at any time for any reason. Except as specifically provided by the Committee, the Company shall not be liable for the loss of existing or potential profit from an Award granted in the event of termination of an employment or other relationship. No Employee or Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.

12.3. Prospective Recipient. The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a copy thereof to the Company, and otherwise complied with the then applicable terms and conditions.

12.4. Stop Transfer Orders. All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

12.5. Nature of Payments. All Awards made pursuant to the Plan are in consideration of services performed or to be performed for the Company or any Affiliate, division or business unit of the Company. Any income or gain realized pursuant to Awards under the Plan constitute a special incentive payment to the Participant and shall not be taken into account, to the extent permissible under applicable

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law, as compensation for purposes of any of the employee benefit plans of the Company or any Affiliate except as may be determined by the Committee or by the Board or board of directors of the applicable Affiliate.

12.6. Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

12.7. Severability. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction, such provision shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful, invalid or unenforceable shall be made or provided under the Plan.

12.8. Construction. All references in the Plan to “Section”, “Sections”, or “Article” are intended to refer to the Section, Sections or Article, as the case may be, of the Plan. As used in the Plan, the words “include” and “including”, and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation”, and the word “or” shall not be deemed to be exclusive.

12.9. Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

12.10. Governing Law. The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed accordingly.

12.11. Effective Date of Plan; Termination of Plan. The Plan, as amended, is adopted by the Board as of July 20, 2021, and will be effective upon approval by the Company stockholders at the 2021 annual meeting or such other meeting held to approve the Plan (the “Effective Date”). Awards may be granted under the Plan at any time and from time to time on or prior to the tenth anniversary of the effective date of the Plan, on which date the Plan will expire except as to Awards then outstanding under the Plan. Such outstanding Awards shall remain in effect until they have been exercised or terminated, or have expired.

12.12. Foreign Employees. Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country.

12.13. Captions. The captions in the Plan are for convenience of reference only, and are not intended to narrow, limit or affect the substance or interpretation of the provisions contained herein.

15

12.14. Code Section 409A. All provisions of the Plan shall be interpreted in a manner consistent with Code Section 409A, and the regulations and other guidance promulgated thereunder. Notwithstanding the preceding, the Company makes no representations concerning the tax consequences of participation in the Plan under Code Section 409A or any other federal, state, or local tax law. Tax consequences will depend, in part, upon the application of relevant tax law, including Code Section 409A, to the relevant facts and circumstances. Participant should consult a competent and independent tax advisor regarding the tax consequences of the Plan.

12.15. Clawback. Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that an Award granted thereunder shall be cancelled if the Participant, without the consent of the Company, while employed by or providing services to the Company or any Affiliate or after termination of such employment or service, (a) violates a non-competition, non-solicitation or non-disclosure covenant or agreement, (b) otherwise engages in activity that is in conflict with or adverse to the interest of the Company or any Affiliate, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Committee in its sole discretion or (c) to the extent applicable to the Participant, otherwise violates any policy adopted by the Company or any of its Affiliates relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to any Participant by the Company or any of its Affiliates as such policy is in effect on the date of grant of the applicable Award or, to the extent necessary to address the requirements of applicable law (including Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as codified in Section 10D of the Exchange Act, Section 304 of the Sarbanes-Oxley Act of 2002 or any other applicable law), as may be amended from time to time. The Committee may also provide in an Award Agreement that (i) a Participant will forfeit any gain realized on the vesting or exercise of such Award if the Participant engages in any activity referred to in the preceding sentence, or (ii) a Participant must repay the gain to the Company realized under a previously paid Performance Award if a financial restatement reduces the amount that would have been earned under such Performance Award.

16

EX-31.1

Exhibit 31.1

CERTIFICATION BY THE

CHIEF EXECUTIVE OFFICER PURSUANT TO

17 CFR 240.13a-14(a)/15(d)-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael P. Huseby, certify that:

1.I have reviewed this report on Form 10-Q for the quarterly period ended October 30, 2021 of Barnes & Noble Education, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 30, 2021

By:	/s/ Michael P. Huseby
	Michael P. Huseby
	Chairman and Chief Executive Officer
	Barnes & Noble Education, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION BY THE

CHIEF FINANCIAL OFFICER PURSUANT TO

17 CFR 240.13a-14(a)/15(d)-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas D. Donohue, certify that:

1.I have reviewed this report on Form 10-Q for the quarterly period ended October 30, 2021 of Barnes & Noble Education, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 30, 2021

By:	/s/ Thomas D. Donohue
	Thomas D. Donohue
	Chief Financial Officer
	Barnes & Noble Education, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

AND 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Barnes & Noble Education, Inc. (the “Company”) on Form 10-Q for the period ended October 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael P. Huseby, Chairman and Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael P. Huseby

Michael P. Huseby

Chairman and Chief Executive Officer
Barnes & Noble Education, Inc.

November 30, 2021

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

AND 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Barnes & Noble Education, Inc. (the “Company”) on Form 10-Q for the period ended October 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas D. Donohue, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas D. Donohue

Thomas D. Donohue

Chief Financial Officer
Barnes & Noble Education, Inc.

November 30, 2021

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Oct. 30, 2021	Nov. 26, 2021
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 30, 2021
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Shell Company	false
Entity Registrant Name	BARNES & NOBLE EDUCATION, INC.
Entity Central Index Key	0001634117
Current Fiscal Year End Date	--04-30
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		51,993,048
Document Quarterly Report	true
Trading Symbol	BNED
Security Exchange Name	NYSE
Title of 12(b) Security	Common Stock, $0.01 par value per share
Document Transition Report	false
Entity File Number	1-37499
Local Phone Number	991-2665
City Area Code	(908)
Entity Address, Postal Zip Code	07920
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-0599018
Entity Address, State or Province	NJ
Entity Address, City or Town	Basking Ridge,
Entity Address, Address Line One	120 Mountain View Blvd.,
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes

XML

Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Sales:
Product sales and other	$ 577,329	$ 551,832	$ 805,099	$ 745,042
Rental income	49,648	43,653	62,672	54,457
Total sales	626,977	595,485	867,771	799,499
bned_Cost of Product and Other Cost of Sales	453,070	452,475	627,231	618,240
Rental cost of sales	28,348	27,725	34,952	35,112
Cost of Goods and Services Sold	481,418	480,200	662,183	653,352
Gross profit	145,559	115,285	205,588	146,147
Selling and administrative expenses	107,902	91,972	194,137	162,015
Depreciation and amortization expense	11,952	13,193	24,576	27,256
Restructuring and other charges	1,116	3,387	3,739	9,058
Operating (loss) income	24,589	6,733	(16,864)	(52,182)
Interest expense, net	2,264	912	4,758	3,565
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total	22,325	5,821	(21,622)	(55,747)
Income tax expense (benefit)	(203)	(1,694)	196	(16,610)
Net (loss) income	$ 22,528	$ 7,515	$ (21,818)	$ (39,137)
(Loss) Earnings per share of common stock
Basic	$ 0.43	$ 0.15	$ (0.42)	$ (0.81)
Diluted	$ 0.41	$ 0.15	$ (0.42)	$ (0.81)
Weighted average common shares outstanding
Basic	51,666	48,804	51,570	48,608
Diluted	54,568	49,428	51,570	48,608

XML

Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Thousands	Oct. 30, 2021	May 01, 2021	Oct. 31, 2020
Current assets:
Cash and cash equivalents	$ 10,996	$ 8,024	$ 7,353
Receivables, net	218,053	121,072	167,493
Merchandise inventories, net	370,529	281,112	457,677
Textbook rental inventories	50,642	28,692	50,736
Prepaid expenses and other current assets	68,965	61,933	23,762
Total current assets	719,185	500,833	707,021
Net property and equipment	91,875	89,172	93,130
Operating Lease, Right-of-Use Asset	252,650	240,456	286,038
Intangible assets, net	141,847	150,904	166,140
Goodwill	4,700	4,700	4,700
Deferred Tax Assets, Tax Deferred Expense	23,248	23,248	8,231
Other noncurrent assets	26,010	29,105	31,734
Total assets	1,259,515	1,038,418	1,296,994
Current liabilities:
Accounts payable	333,099	137,578	314,042
Accrued liabilities	122,734	92,871	134,181
Operating Lease, Liability, Current	118,434	92,513	121,518
Short-term Debt	0	50,000	0
Total current liabilities	574,267	372,962	569,741
Operating Lease, Liability, Noncurrent	171,341	184,780	198,990
Other long-term liabilities	51,113	52,042	48,329
Long-term Line of Credit, Noncurrent	183,300	127,600	99,500
Liabilities	980,021	737,384	916,560
Commitments and contingencies	0	0	0
Preferred Stock, Value, Issued	0	0	0
Common Stock, Value, Outstanding	541	533	533
Additional Paid in Capital	736,886	734,257	735,647
Retained Earnings (Accumulated Deficit)	(436,432)	(414,614)	(321,964)
Treasury Stock, Value	(21,501)	(19,142)	(33,782)
Total Equity	279,494	301,034	380,434
Total liabilities and Parent Company equity	$ 1,259,515	$ 1,038,418	$ 1,296,994
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	5,000	5,000	5,000
Preferred Stock, Shares Issued	0	0	0
Preferred Stock, Shares Outstanding	0	0	0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01	$ 0.01
Common Stock, Shares Authorized	200,000	200,000	200,000
Common Stock, Shares, Issued	54,162	53,327	53,316
Common Stock, Shares, Outstanding	51,976	51,379	49,064

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020
Net Income (Loss) Attributable to Parent	$ (21,818)	$ (39,137)
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization expense	24,576	27,256
Content Amortization	2,586	2,386
Amortization of Debt Issuance Costs	725	541
COGS Inventory Loss and Markdown	434	0
Deferred Income Tax Expense (Benefit)	0	(426)
Share-based Compensation	2,600	2,701
Increase (Decrease) in Other Noncurrent Assets and Liabilities, Net	1,462	5,016
Increase (Decrease) in Operating Liabilities	286	6,597
Net Cash Provided by (Used in) Operating Activities	24,142	91,386
Cash flows from investing activities:
Purchases of property and equipment	(21,264)	(16,197)
Increase (Decrease) in Other Noncurrent Assets	460	3
Net cash flows used in investing activities	(20,804)	(16,194)
Cash flows from financing activities:
Proceeds from borrowings on Credit Facility	259,720	330,800
Repayments of borrowings on Credit Facility	(254,020)	(406,000)
Payments for Repurchase of Common Stock	(2,359)	(881)
Proceeds from Stock Options Exercised	37	0
Net cash flows used in financing activities	3,378	(76,081)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	6,716	(889)
Changes in other operating assets and liabilities, net:
Receivables, net	(96,981)	(76,642)
Merchandise inventories	(89,851)	(28,738)
Textbook rental inventories	(21,950)	(10,026)
Prepaid expenses and other current assets	(3,288)	(7,585)
Accounts payable and accrued liabilities	225,361	209,443
Changes in other operating assets and liabilities, net	(13,291)	(86,452)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	16,814	9,008
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	$ 23,530	$ 8,119

XML

Consolidated Statement of Equity Statement - USD ($) $ in Thousands	Total	Additional Paid-in Capital [Member]	Common Stock [Member]	Treasury Stock [Member]	Retained Earnings
Common Stock, Shares, Issued			52,140,000
Treasury Stock, Shares				3,842,000
Total Equity	$ 417,751	$ 732,958	$ 521	$ 32,901	$ (282,827)
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures			514,000
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	0	(5)	$ 5
Stock-based compensation expense	1,521	1,521
Shares repurchased for tax withholdings for vested stock awards				179,000
Treasury Stock, Value, Acquired, Cost Method				$ 342
CostOfRepurchasedSharesForTaxWittholdingForShareBasedCompensation	(342)
Net Income (Loss) Attributable to Parent	(46,652)
Net Income (Loss) Attributable to Parent	(39,137)
Common Stock, Shares, Issued			52,654,000
Treasury Stock, Shares				4,021,000
Total Equity	372,278	734,474	$ 526	$ 33,243	(329,479)
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures			662,000
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	0	(7)	$ 7
Stock-based compensation expense	1,180	1,180
Shares repurchased for tax withholdings for vested stock awards				231,000
CostOfRepurchasedSharesForTaxWittholdingForShareBasedCompensation	(539)			$ (539)
Net Income (Loss) Attributable to Parent	$ 7,515
Common Stock, Shares, Issued	53,316,000		53,316,000
Treasury Stock, Shares				4,252,000
Total Equity	$ 380,434	735,647	$ 533	$ 33,782	(321,964)
Common Stock, Shares, Issued	53,327,000		53,327,000
Treasury Stock, Shares				1,948,000
Total Equity	$ 301,034	734,257	$ 533	$ 19,142	(414,614)
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures			338,000
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	0	(3)	$ 3
Stock-based compensation expense	1,122	1,122
Shares repurchased for tax withholdings for vested stock awards				130,000
Treasury Stock, Value, Acquired, Cost Method				$ 1,215
CostOfRepurchasedSharesForTaxWittholdingForShareBasedCompensation	(1,215)
Net Income (Loss) Attributable to Parent	$ (44,346)
Shares repurchased for tax withholdings for vested stock awards	238,170
Net Income (Loss) Attributable to Parent	$ (21,818)
Common Stock, Shares, Issued			53,665,000
Treasury Stock, Shares				2,078,000
Total Equity	256,595	735,376	$ 536	$ 20,357	(458,960)
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures			487,000
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	0	(5)	$ 5
Stock-based compensation expense	1,478	1,478
Shares repurchased for tax withholdings for vested stock awards				108,000
CostOfRepurchasedSharesForTaxWittholdingForShareBasedCompensation	(1,144)			$ (1,144)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			10,000
Stock Issued During Period, Value, Stock Options Exercised	37	37	$ 0
Net Income (Loss) Attributable to Parent	$ 22,528
Common Stock, Shares, Issued	54,162,000		54,162,000
Treasury Stock, Shares				2,186,000
Total Equity	$ 279,494	$ 736,886	$ 541	$ 21,501	$ (436,432)

XML

Organization

6 Months Ended

Oct. 30, 2021

Organization

Note 1. Organization

Description of Business

Barnes & Noble Education, Inc. (“BNED”) is one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. We are also one of the largest textbook wholesalers, inventory management hardware and software providers, and a leading provider of digital education solutions. We operate 1,445 physical, virtual, and custom bookstores and serve more than 6 million students, delivering essential educational content and tools within a dynamic omnichannel retail environment. Additionally, we offer direct-to-student products and services to help students study more effectively and improve academic performance.

The strengths of our business include our ability to compete by developing new products and solutions to meet market needs, our large operating footprint with direct access to students and faculty, our well-established, deep relationships with academic partners and stable, long-term contracts and our well-recognized brands. We expect to continue to introduce scalable and advanced digital solutions focused largely on the student, expand our e-commerce capabilities and accelerate such capabilities through our recent merchandising partnership with Fanatics Retail Group Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc. (“FLC”) (collectively referred to herein as the “FLC Partnership”), increase market share with new accounts, and expand our strategic opportunities through acquisitions and partnerships. We expect general merchandise sales to increase over the long term, as our product assortments continue to emphasize and reflect changing consumer trends, and we evolve our presentation concepts and merchandising of products in stores and online, which we expect to be further enhanced and accelerated through the “FLC Partnership”. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our logo and emblematic general merchandise business.

We believe the Barnes & Noble brand (licensed from our former parent) along with our subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States. Our large college footprint, reputation, and credibility in the marketplace not only support our marketing efforts to universities, students, and faculty, but are also important to our relationship with leading publishers who rely on us as one of their primary distribution channels, and for being a trusted source for students in our direct-to-student digital solutions business.

We have three reportable segments: Retail, Wholesale and DSS. For additional information related to our strategies, operations and segments, see Part I - Item 1. Business in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

Partnership with Fanatics and FLC

In December 2020, we entered into the FLC Partnership. Through this partnership, we receive unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of our general merchandise business. Fanatics’ cutting-edge e-commerce and technology expertise offers our campus stores expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform. Coupled with FLC, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, our campus stores have improved access to trend and sales performance data on licensees, product styles, and design treatments.

We maintain our relationships with campus partners and remain responsible for staffing and managing the day-to-day operations of our campus bookstores. We also work closely with our campus partners to ensure that each campus store

maintains unique aspects of in-store merchandising, including localized product assortments and specific styles and designs that reflect each campus’s brand. We leverage Fanatics’ e-commerce technology and expertise for the operational management of the emblematic merchandise and gift sections of our campus store websites. FLC manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores.

In December 2020, Fanatics, Inc. and Lids Holdings, Inc. jointly made a strategic equity investment in BNED. On April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC, which was finalized during the first quarter of Fiscal 2022. As contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products during the first quarter of Fiscal 2022. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis. For additional information, see Part II - Item 8. Financial Statements and Supplementary Data - Note 2. Summary of Significant Accounting Policies - Merchandise Inventories and Note 6. Equity and Earnings Per Share in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

COVID-19 Business Impact

Since the fourth quarter of Fiscal 2020, our business has been significantly negatively impacted by the COVID-19 pandemic, resulting in an unprecedented material decline in revenue. Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings.

The COVID-19 impact on higher education remains a fluid situation, and we are committed to supporting our campus partners through our flexible offerings and our ability to quickly pivot to ensure uninterrupted service as institutions manage the safety of their campuses. If economic conditions caused by the pandemic do not recover as currently estimated by management or market factors currently in place change, there could be a further impact on our results of operations, financial condition and cash flows from operations. We will continue to assess our operations and will continue to consider the guidance of local governments and our campus partners to how to operate our bookstores in the safest manner for our employees and customers. Please see our Part II - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

XML

Employees Benefit Plan

6 Months Ended

Oct. 30, 2021

Employees' Defined Contribution Plan

Note 11. Employee Benefit Plans

We sponsor defined contribution plans for the benefit of substantially all of the employees of BNC and DSS. MBS maintains a profit sharing plan covering substantially all full-time employees of MBS. For all plans, we are responsible to fund the employer contributions directly. Total employee benefit expense for these plans was $1,004 and $0 during the 13 weeks ended October 30, 2021 and October 31, 2020, respectively. Total employee benefit expense for these plans was $1,048 and $0 during the 26 weeks ended October 30, 2021 and October 31, 2020, respectively.

Effective April 2020, due to the significant impact as a result of COVID-19 related campus store closures, we temporarily suspended employer matching contributions into our 401(k) plans. The matching contributions were reinstated effective July 25, 2021.

XML

Organization - Additional Information Person in Millions	6 Months Ended
	Oct. 30, 2021 Person segment Store
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of Stores | Store	1,445
Number of students covered to build relationships and derive sales | Person	6
Number of Reportable Segments | segment	3

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Employees Benefit Plans - Additional Information - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Company contributions, employee benefit expenses	$ 1,004	$ 0	$ 1,048	$ 0

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Summary of Significant Accounting Policies (Notes)

6 Months Ended

Oct. 30, 2021

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. These condensed consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP. All material intercompany accounts and transactions have been eliminated in consolidation.

Our business is highly seasonal. Our quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. Due to the seasonal nature of the business, the results of operations for the 26 weeks ended October 30, 2021 are not indicative of the results expected for the 52 weeks ending April 30, 2022 (Fiscal 2022).

For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as MBS sells textbooks and other course materials for retail distribution. Our DSS segment sales and operating profit are realized relatively consistently throughout the year.

Use of Estimates

In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Restricted Cash

As of October 30, 2021 and October 31, 2020, we had restricted cash of $12,534 and $766, respectively, comprised of $11,637 and $0, respectively, in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the FLC Partnership's merchandising agreement and $897 and $766, respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

Merchandise Inventories

Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. Market value of our inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation. Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory, which includes certain significant assumptions, including markdowns, sales below cost, inventory aging and expected demand.

Cost is determined primarily by the retail inventory method for our Retail segment and last-in first out, or “LIFO”, method for our Wholesale segment. Our textbook inventories, for Retail and Wholesale, and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of our inventories.

For our physical bookstores, we also estimate and accrue shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends.

The Retail Segment fulfillment order is directed first to our wholesale business before other sources of inventory are utilized. The products that we sell originate from a wide variety of domestic and international vendors. After internal sourcing, the bookstore purchases textbooks from outside suppliers and publishers.

As contemplated by the FLC Partnership merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC and received proceeds of $41,773, and recognized a merchandise inventory loss on the sale of $10,262 in cost of goods sold during the 52 weeks ended May 1, 2021 for the Retail Segment. The final inventory sale price was determined during the first quarter of Fiscal 2022, at which time, we received additional proceeds of $1,906, and recognized a merchandise inventory loss on the sale of $434 in cost of goods sold for the Retail Segment.

Textbook Rental Inventories

Physical textbooks out on rent are categorized as textbook rental inventories. At the time a rental transaction is consummated, the book is removed from merchandise inventories and moved to textbook rental inventories at cost. The cost of the book is amortized down to its estimated residual value over the rental period. The related amortization expense is included in cost of goods sold. At the end of the rental period, upon return, the book is removed from textbook rental inventories and recorded in merchandise inventories at its amortized cost.

Leases

We recognize lease assets and lease liabilities on the condensed consolidated balance sheet for all operating lease arrangements based on the present value of future lease payments as required by Accounting Standards Codification ("ASC") Topic 842, Leases. We do not recognize lease assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less). We recognize lease expense on a straight-line basis over the lease term for contracts with fixed lease payments, including those with fixed annual minimums, or over a rolling twelve-month period for leases where the annual guarantee resets at the start of each contract year, in order to best reflect the pattern of usage of the underlying leased asset. For additional information, see Note 8. Leases.

Revenue Recognition and Deferred Revenue

Product sales and rentals

The majority of our revenue is derived from the sale of products through our bookstore locations, including virtual bookstores, and our bookstore affiliated e-commerce websites, and contains a single performance obligation. Revenue from sales of our products is recognized at the point in time when control of the products is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for the products. For additional information, see Note 3. Revenue.

Retail product revenue is recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers for products ordered through our websites and virtual bookstores. Wholesale product revenue is recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer. Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of goods sold.

Revenue from the rental of physical textbooks, which contains a single performance obligation, is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer. Rental periods are typically for a single semester and are always less than one year in duration. We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so. We record the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout. In these instances, we accelerate any remaining deferred rental revenue at the point of sale.

Revenue from the rental of digital textbooks, which contains a single performance obligation, is recognized at the point of sale. A software feature is embedded within the content of our digital textbooks, such that upon expiration of the rental term the customer is no longer able to access the content. While the digital rental allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, our performance obligation is complete.

We estimate returns based on an analysis of historical experience. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded.

For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer. There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service. For those transactions where we are the principal, we record revenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis. Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year.

We do not have gift card or customer loyalty programs. We do not treat any promotional offers as expenses. Sales tax collected from our customers is excluded from reported revenues. Our payment terms are generally 30 days and do not extend beyond one year.

Service and other revenue

Service and other revenue is primarily derived from DSS segment subscription-based service revenues and partnership marketing services which includes promotional activities and advertisements within our physical bookstores and web properties performed on behalf of third-party customers.

Subscription-based revenue, which contains a single performance obligation, is deferred and recognized based on the passage of time over the subscription period commencing at the point of sale, when control of the service transfers to the customer. The majority of subscriptions sold are one month in duration.

Partnership marketing agreements often include multiple performance obligations which are individually negotiated with our customers. For these arrangements that contain distinct performance obligations, we allocate the transaction price based on the relative standalone selling price method by comparing the standalone selling price (“SSP”) of each distinct performance obligation to the total value of the contract. The revenue is recognized as each performance obligation is satisfied, typically at a point in time for partnership marketing service and overtime for advertising efforts as measured based upon the passage of time for contracts that are based on a stated period of time or the number of impressions delivered for contracts with a fixed number of impressions.

Cost of Sales

Our cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.

Selling and Administrative Expenses

Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include long-term incentive plan compensation expense and general office expenses, such as merchandising, procurement, field support, finance and accounting, and operating costs related to our DSS segment subscription-based services business. Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services.

Evaluation of Goodwill and Other Long-Lived Assets

As of October 30, 2021, we had $0, $0 and $4,700 of goodwill on our condensed consolidated balance sheet related to our Retail, Wholesale and DSS reporting units, respectively. In accordance with ASC 350-10, Intangibles - Goodwill and Other, we complete our annual goodwill impairment test as of the first day of the third quarter of each fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the reporting unit exceeds its fair value. We completed our annual goodwill impairment test as of the first day of the third quarter of Fiscal 2021. The fair value of the DSS reporting unit was determined to exceed the carrying value of the reporting unit; therefore, no goodwill impairment was recognized.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. As of October 30, 2021, our other long-lived assets include property and equipment, operating lease right-of-use assets, amortizable intangibles, and other noncurrent assets of $91,875, $252,650, $141,847, and $26,010, respectively, on our condensed consolidated balance sheet.

Our business has been significantly negatively impacted by the ongoing COVID-19 pandemic, as many schools continued to adjust their learning models and on-campus activities. Some of the negative trends impacting our results, such as fewer students returning to campus and restrictions to attendance for athletic events, have been marginally reversed during the current Fall semester. Despite the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve. We cannot accurately predict the duration or extent of the impact of the COVID-19 virus, including the Delta variant, on enrollments, university budgets, athletics and other areas that directly affect our business operations. Although most four year schools have returned to a traditional on-campus environment for learning in the current Fall semester, as well as hosted traditional on campus sporting activities and events, there is still uncertainty about the duration and extent of the impact of the COVID-19 pandemic, including on enrollments at community colleges and by international students, the continuation of remote and hybrid class offerings, and its effect on our ability to source products, including textbooks and general merchandise offerings. We believe indicators of impairment do not exist and the carrying amount of our long-lived assets and property and equipment are recoverable and the fair value of the DSS reporting unit continues to exceed the carrying value of the reporting unit resulting in no goodwill impairment during the quarter. We will continue to evaluate our other long-lived assets for indicators of impairment.

Income Taxes

As of October 30, 2021, other long-term liabilities includes $25,335 related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index (“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle.

At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $745 of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months.

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Revenue (Notes)

6 Months Ended

Oct. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Note 3. Revenue

Revenue from sales of our products and services is recognized either at the point in time when control of the products is transferred to our customers or over time as services are provided in an amount that reflects the consideration we expect to be entitled to in exchange for the products or services. See Note 2. Summary of Significant Accounting Policies for additional information related to our revenue recognition policies and Note 4. Segment Reporting for a description of each segment's product and service offerings.

Disaggregation of Revenue

The following table disaggregates the revenue associated with our major product and service offerings:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Retail
Product Sales (a)	$	546,358	$	517,837	$	735,416	$	659,663
Rental Income	49,648		43,653		62,672		54,457
Service and Other Revenue (b)	12,946		15,024		21,333		21,170
Retail Total Sales	$	608,952	$	576,514	$	819,421	$	735,290
Wholesale Sales	$	21,669	$	36,387	$	66,153	$	116,681
DSS Sales (c)	$	8,279	$	5,947	$	16,582	$	11,819
Eliminations (d)	$	(11,923)	$	(23,363)	$	(34,385)	$	(64,291)
Total Sales	$	626,977	$	595,485	$	867,771	$	799,499

(a)Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year.

(b)Service and other revenue primarily relates to brand partnerships and other service revenues.

(c)DSS sales primarily relate to direct-to-student subscription-based revenue.

(d)The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.

Contract Assets and Contract Liabilities

Contract assets represent the sale of goods or services to a customer before we have the right to obtain consideration from the customer. Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional. Contract assets (unbilled receivables) were $0 as of October 30, 2021, October 31, 2020 and May 1, 2021 on our condensed consolidated balance sheets.

Contract liabilities represent an obligation to transfer goods or services to a customer for which we have received consideration and consists of our deferred revenue liability (deferred revenue). Deferred revenue consists of the following:

•advanced payments from customers related to textbook rental and subscription-based performance obligations, which are recognized ratably over the terms of the related rental or subscription periods;

•unsatisfied performance obligations associated with partnership marketing services, which are recognized when the contracted services are provided to our partnership marketing customers; and

•unsatisfied performance obligations associated with the premium paid for the sale of treasury shares, which are expected to be recognized over the term of the e-commerce and merchandising contracts for Fanatics and FLC, respectively.

Deferred revenue of $29,820, $32,844, and $13,469 is recorded in accrued liabilities and $4,470, $0, and $4,670 is recorded in other long-term liabilities on our condensed consolidated balance sheets for the periods ended October 30, 2021, October 31, 2020 and May 1, 2021, respectively. As of October 30, 2021, we expect to recognize $29,820 of the deferred revenue balance within the next 12 months. The following table presents changes in deferred revenue associated with our contract liabilities:

	26 weeks ended
	October 30, 2021		October 31, 2020
Deferred revenue at the beginning of period	$	18,139	$	13,373
Additions to deferred revenue during the period	82,515		91,051
Reductions to deferred revenue for revenue recognized during the period	(66,364)		(71,580)
Deferred revenue balance at the end of period	$	34,290	$	32,844

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Segment Reporting (Notes)

6 Months Ended

Oct. 30, 2021

Segment Reporting

Note 4. 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 1, 2021.

Retail

The Retail Segment operates 1,445 college, university, and K-12 school bookstores, comprised of 794 physical bookstores and 651 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 independently or along with our merchant partners, 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 3,200 physical bookstores (including our Retail Segment's 794 physical bookstores) and sources and distributes new and used textbooks to our 651 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 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Sales:
Retail	$	608,952	$	576,514	$	819,421	$	735,290
Wholesale	21,669		36,387		66,153		116,681
DSS	8,279		5,947		16,582		11,819
Elimination	(11,923)		(23,363)		(34,385)		(64,291)
Total Sales	$	626,977	$	595,485	$	867,771	$	799,499
Gross Profit
Retail (a)	$	128,825	$	95,512	$	176,968	$	111,647
Wholesale	5,620		10,714		16,025		27,471
DSS	6,906		4,662		13,936		9,408
Elimination	4,208		4,397		(1,341)		(2,379)
Total Gross Profit	$	145,559	$	115,285	$	205,588	$	146,147
Depreciation and Amortization
Retail	$	8,669	$	9,985	$	18,076	$	20,555
Wholesale	1,364		1,322		2,664		2,617
DSS	1,902		1,855		3,801		4,020
Corporate Services	17		31		35		64
Total Depreciation and Amortization	$	11,952	$	13,193	$	24,576	$	27,256
Operating Income (Loss)
Retail	$	29,596	$	7,072	$	(1,760)	$	(47,744)
Wholesale	(131)		5,246		4,983		16,917
DSS	(2,301)		(2,196)		(3,617)		(3,651)
Corporate Services	(6,868)		(7,844)		(15,226)		(15,396)
Elimination	4,293		4,455		(1,244)		(2,308)
Total Operating Income (Loss)	$	24,589	$	6,733	$	(16,864)	$	(52,182)

	13 weeks ended				26 weeks ended
Reconciliation of segment Operating Income (Loss) to consolidated Income (Loss) Before Income Taxes:	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Total Operating Income (Loss)	$	24,589	$	6,733	$	(16,864)	$	(52,182)
Interest Expense, net	2,264		912		4,758		3,565
Income (Loss) Before Income Taxes	$	22,325	$	5,821	$	(21,622)	$	(55,747)

(a)    For the 26 weeks ended October 30, 2021, gross margin includes a merchandise inventory loss of $434 in the Retail Segment. See Note 2. Summary of Significant Accounting Policies - Merchandise Inventories.

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Equity and Earnings Per Share (Notes)

6 Months Ended

Oct. 30, 2021

Net Earnings (Loss) Per Share

Note 5. Equity and Earnings Per Share

Equity

During the 26 weeks ended October 30, 2021, our shareholders approved an amendment to the Equity Incentive Plan to increase the number of shares available for issuance by an additional 3,000,000 shares of our Common Stock, for an aggregate total of 13,409,345 shares.

Share Repurchases

On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50,000, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes. During the 26 weeks ended October 30, 2021, we did not repurchase shares of our Common Stock under the program and as of October 30, 2021, approximately $26,669 remains available under the stock repurchase program.

During the 26 weeks ended October 30, 2021, we repurchased 238,170 shares of our Common Stock outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

Earnings Per Share

Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. During the 13 weeks ended October 30, 2021 and October 31, 2020, average shares of 523,447 and 1,932,628 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively. During the 26 weeks ended October 30, 2021 and October 31, 2020, average shares of 3,771,594 and 2,849,291 were excluded from the diluted earnings per share calculation as their inclusion would have been antidilutive, respectively.

The following is a reconciliation of the basic and diluted earnings per share calculation:

	13 weeks ended				26 weeks ended
(shares in thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Numerator for basic earnings per share:
Net income (loss) available to common shareholders	$	22,528	$	7,515	$	(21,818)	$	(39,137)
Less allocation of earnings to participating securities	(64)		(6)		—		—
Net income (loss) available to common shareholders	$	22,464	$	7,509	$	(21,818)	$	(39,137)
Numerator for diluted earnings per share:
Net income (loss) available to common shareholders	$	22,464	$	7,509	$	(21,818)	$	(39,137)
Allocation of earnings to participating securities	64		6		—		—
Less diluted allocation of earnings to participating securities	(61)		(6)		—		—
Net income (loss) available to common shareholders	$	22,467	$	7,509	$	(21,818)	$	(39,137)
Denominator for basic earnings per share:
Basic weighted average shares of Common Stock	51,666		48,804		51,570		48,608
Denominator for diluted earnings per share:
Basic weighted average shares of Common Stock	51,666		48,804		51,570		48,608
Average dilutive restricted stock units	611		235		—		—
Average dilutive performance shares	—		—		—		—
Average dilutive restricted shares	126		18		—		—
Average dilutive performance share units	255		224		—		—
Average dilutive stock options	1,910		147		—		—
Diluted weighted average shares of Common Stock	54,568		49,428		51,570		48,608
Earnings (Loss) per share of Common Stock:
Basic	$	0.43	$	0.15	$	(0.42)	$	(0.81)
Diluted	$	0.41	$	0.15	$	(0.42)	$	(0.81)

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Fair Values of Financial Instruments (Notes)

6 Months Ended

Oct. 30, 2021

Fair Value Disclosures

Note 6. Fair Value Measurements

In accordance with ASC No. 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1—Observable inputs that reflect quoted prices in active markets

Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable

Level 3—Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions

Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable. The fair values of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values because of the short-term nature of these instruments, which are all considered Level 1. The fair value of short-term and long-term debt approximates its carrying value.

Non-Financial Assets

Our non-financial assets include goodwill, property and equipment, operating lease right-of-use assets, and intangible assets. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. We review our

long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets.

Non-Financial Liabilities

We granted phantom share units as long-term incentive awards which are settled in cash based on the fair market value of a share of common stock of the Company at each vesting date. The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions. As of October 30, 2021, we recorded a liability of $3,474 (Level 2 input) which is reflected in accrued liabilities ($2,345) and other long-term liabilities ($1,129) on the condensed consolidated balance sheet.

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Credit Facility (Notes)

6 Months Ended

Oct. 30, 2021

Debt Disclosure

Note 7. Credit Facility

We have a credit agreement (the “Credit Agreement”), amended March 31, 2021 and March 1, 2019, under which the lenders committed to provide us with a 5 year asset-backed revolving credit facility in an aggregate committed principal amount of $400,000 (the “Credit Facility”) effective from the date of the amendment. We have the option to request an increase in commitments under the Credit Facility of up to $100,000, subject to certain restrictions. Proceeds from the Credit Facility are used for general corporate purposes, including seasonal working capital needs. The agreement includes an incremental first in, last out seasonal loan facility (the “FILO Facility”) for a $100,000 incremental facility maintaining the maximum availability under the Credit Agreement at $500,000. On March 31, 2021, we were granted a waiver to the condition to the current draw under the FILO Facility.

For additional information including interest terms and covenant requirements related to the Credit Facility, refer to Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity in our Annual Report on Form 10-K for the fiscal year ended May 1, 2021.

During the 26 weeks ended October 30, 2021, we borrowed $259,720 and repaid $254,020 under the Credit Agreement, with $183,300 of outstanding borrowings as of October 30, 2021, comprised entirely of borrowings under the Credit Facility. During the 26 weeks ended October 31, 2020, we borrowed $330,800 and repaid $406,000 under the Credit Agreement, with $99,500 of outstanding borrowings as of October 31, 2020, comprised entirely of borrowings under the Credit Facility. As of both October 30, 2021 and October 31, 2020, we have issued $4,759 in letters of credit under the Credit Facility.

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Leases (Notes)

6 Months Ended

Oct. 30, 2021

Leases [Abstract]

Lessee, Operating Leases

Note 8. Leases

We recognize lease assets and lease liabilities on the condensed consolidated balance sheets for substantially all lease arrangements as required by FASB ASC 842, Leases (Topic 842). Our portfolio of leases consists of operating leases comprised of operations agreements which grant us the right to operate on-campus bookstores at colleges and universities; real estate leases for office and warehouse operations; and vehicle leases. We do not have finance leases or short-term leases (i.e., those with a term of twelve months or less).

We recognize a right of use ("ROU") asset and lease liability in our condensed consolidated balance sheets for leases with a term greater than twelve months. Options to extend or terminate a lease are included in the determination of the ROU asset and lease liability when it is reasonably certain that such options will be exercised. Our lease terms generally range from one year to fifteen years and a number of agreements contain minimum annual guarantees, many of which are adjusted at the start of each contract year based on the actual sales activity of the leased premises for the most recently completed contract year.

Payment terms are based on the fixed rates explicit in the lease, including minimum annual guarantees, and/or variable rates based on: i) a percentage of revenues or sales arising at the relevant premises ("variable commissions"), and/or ii) operating expenses, such as common area charges, real estate taxes and insurance. For contracts with fixed lease payments, including those with minimum annual guarantees, we recognize lease expense on a straight-line basis over the lease term or over the contract year in order to best reflect the pattern of usage of the underlying leased asset and our minimum obligations arising from these types of leases. Our lease agreements do not contain any material residual value guarantees, material restrictions or covenants.

We used our incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable. We utilized an estimated collateralized incremental borrowing rate as of the effective date or the commencement date of the lease, whichever is later.

The following table summarizes lease expense:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Variable lease expense	$	30,738	$	27,275	$	42,440	$	34,682
Operating lease expense	48,990		49,635		65,363		59,431
Net lease expense	$	79,728	$	76,910	$	107,803	$	94,113

The increase in lease expense is primarily due to higher sales for contracts based on a percentage of revenue during the 26 weeks ended October 30, 2021 and the impact of the timing and reduction of minimum contractual guarantees due to temporary store closings due to the COVID pandemic during the 26 weeks ended October 31, 2020.

The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of October 30, 2021:

	As of
	October 30, 2021
Remainder of Fiscal 2022	$	91,979
Fiscal 2023	53,262
Fiscal 2024	43,624
Fiscal 2025	39,912
Fiscal 2026	28,939
Thereafter	72,832
Total lease payments	330,548
Less: imputed interest	(40,773)
Operating lease liabilities at period end	$	289,775

Future lease payment obligations related to leases that were entered into, but did not commence as of October 30, 2021, were not material.

The following summarizes additional information related to our operating leases:

	As of
	October 30, 2021			October 31, 2020
Weighted average remaining lease term (in years)	5.3 years			5.5 years
Weighted average discount rate	4.6		%	4.5		%
Supplemental cash flow information:
Cash payments for lease liabilities within operating activities	$	64,103		$	53,667
ROU assets obtained in exchange for lease liabilities from initial recognition	$	77,811		$	110,834

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Supplementary Information (Notes)

6 Months Ended

Oct. 30, 2021

Supplementary info [Abstract]

Supplementary Information [Text Block]

Note 9. Supplementary Information

Restructuring and other charges

During the 13 and 26 weeks ended October 30, 2021, we recognized restructuring and other charges totaling $1,116 and $3,739, respectively, comprised primarily of $418 and $1,968, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives ($754 is included in accrued liabilities in the condensed consolidated balance sheet as of October 30, 2021), $698 and $1,771, respectively, for costs

associated with professional service costs for restructuring, process improvements, development and integration associated with the FLC Partnership, shareholder activist activities, and liabilities for a facility closure. During the 13 and 26 weeks ended October 31, 2020, we recognized restructuring and other charges totaling $3,387 and $9,058, respectively, comprised primarily of $1,075 and $4,471, respectively, for severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction objectives, ($7,092 is included in accrued liabilities in the condensed consolidated balance sheet as of October 31, 2020), $2,312 and $4,587, respectively, for costs associated with professional service costs for restructuring, process improvements, the financial advisor strategic review process, shareholder activist activities, and liabilities for a facility closure.

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Stock-Based Compensation Stock-Based Compensation (Notes)

6 Months Ended

Oct. 30, 2021

Share-based Payment Arrangement [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 10. Long-Term Incentive Plan Compensation Expense

We recognize compensation expense for restricted stock awards and performance share awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense for these awards based on the number of awards expected to vest, which includes an estimated average forfeiture rate. We calculate the fair value of these awards based on the closing stock price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model and compensation expense is recognized ratably over the requisite service period regardless of whether the market condition is satisfied.

For stock options granted with an "at market" exercise price, we determined the grant fair value using the Black-Scholes model and for stock options granted with "a premium" exercise price, we determined the grant date fair value using the Monte Carlo simulation model. The fair value models for stock options use assumptions that include the risk-free interest rate, expected volatility, expected dividend yield and expected term of the options.

During the 26 weeks ended October 30, 2021, we granted the following awards:

•47,216 restricted stock units ("RSU") awards and 35,412 restricted stock ("RS") awards with a one year vesting period to the Board of Directors ("BOD") members for annual compensation.

•809,282 restricted stock units ("RSU") awards to employees with a three year vesting period.

•322,495 stock options with an exercise price of $10.80 per stock option, which was the fair market value on the date of grant (Stock Option Grant #1) and 348,723 stock options with an exercise price of $13.30 per stock option, which was above the fair market value on the date of grant, (Stock Option Grant #2) granted to employees. The stock options are exercisable in four equal annual installments commencing one year after the date of grant and have a ten year term. Holders are not entitled to receive dividends (if any) prior to vesting and exercise of the options. The following summarizes the stock option fair value assumptions:

	Stock Option Grant #1			Stock Option Grant #2
Exercise Price	$	10.80		$	13.30
Valuation method utilized	Black-Scholes			Monte Carlo
Risk-free interest rate	0.94		%	0.94		%
Expected option term	6.2 years			10.0 years
Company volatility	74		%	74		%
Dividend yield	—		%	—		%
Grant date fair value per award	$	7.10		$	6.73

The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term. For Stock Option Grant #1, we are permitted to use the simplified approach to estimate the expected term of the stock options, which typically assumes exercise occurs at the mid-point between the end of the vesting period and the expiration date. The simplified approach is not allowed for premium-priced options (Stock Option Grant #2), which were estimated using a stock price multiple, as there is no option exercise history which to base an early exercise option. The expected stock option term represents the weighted average period of time that stock options granted are expected to be outstanding, based on vesting schedules and the

contractual term of the stock options. Volatility is based on the historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term.

•183,348 phantom share units granted to employees. Each phantom share represents the economic equivalent to one share of the Company's common stock and will be settled in cash based on the fair market value of a share of common stock at each vesting date in an amount not to exceed $32.40 per share. The phantom shares vest and will be settled in three equal installments commencing one year after the date of grant. The fair value of the phantom shares was determined using the closing stock price on the date of the award less the fair value of the call option which was estimated using the Black-Scholes model. The average fair value on the date of grant was $8.50 per phantom share using risk-free rates ranging from 0.08%-0.53% for the three tranches and annual volatility ranging from 78%-92% for the three tranches. The fair value of the liability for the cash-settled phantom share unit awards will be remeasured at the end of each reporting period through settlement to reflect current risk-free rate and volatility assumptions. As of October 30, 2021, we recorded a liability of $3,474 (Level 2 input) related to phantom share units grants which is reflected in accrued liabilities and other long-term liabilities on the condensed consolidated balance sheet.

We recognized compensation expense for long-term incentive plan awards in selling and administrative expenses as follows:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Stock-based awards
Restricted stock expense	$	119	$	20	$	207	$	50
Restricted stock units expense	931		976		1,661		2,335
Performance share units expense	29		73		63		205
Stock option expense	399		111		669		111
Sub-total stock-based awards:	$	1,478	$	1,180	$	2,600	$	2,701
Cash settled awards
Phantom share units expense	$	2,452	$	224	$	4,924	$	224
Total compensation expense for long-term incentive awards	$	3,930	$	1,404	$	7,524	$	2,925

Total unrecognized compensation cost related to unvested awards as of October 30, 2021 was $21,487 and is expected to be recognized over a weighted-average period of 2.8 years.

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Income Taxes Income Taxes (Notes)

6 Months Ended

Oct. 30, 2021

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 12. Income Taxes

We recorded an income tax benefit of $(203) on pre-tax income of $22,325 during the 13 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)% and an income tax benefit of $(1,694) on pre-tax income of $5,821 during the 13 weeks ended October 31, 2020, which represented an effective income tax rate of (29.1)%.

We recorded income tax expense of $196 on a pre-tax loss of $(21,622) during the 26 weeks ended October 30, 2021, which represented an effective income tax rate of (0.9)%% and an income tax benefit of $(16,610) on a pre-tax loss of $(55,747) during the 26 weeks ended October 31, 2020, which represented an effective income tax rate of 29.8%.

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. As of October 30, 2021, we determined that it was more likely than not that we would not realize certain deferred tax assets and our tax rate for the current fiscal year reflects this determination. We will continue to evaluate this position.The effective tax rate for the 26 weeks ended October 30, 2021 is lower as compared to the prior year comparable period due to the assessment of the realization of deferred tax assets and loss carrybacks recorded in the prior year.

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Legal Proceedings (Notes)

6 Months Ended

Oct. 30, 2021

Legal Proceedings

Note 13. Legal Proceedings

We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters. The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on our condensed consolidated financial position, results of operations, or cash flows.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Oct. 30, 2021

Basis of Presentation

Basis of Presentation and Consolidation

Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. These condensed consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP. All material intercompany accounts and transactions have been eliminated in consolidation.

Our business is highly seasonal. Our quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in our fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. Due to the seasonal nature of the business, the results of operations for the 26 weeks ended October 30, 2021 are not indicative of the results expected for the 52 weeks ending April 30, 2022 (Fiscal 2022).

For certain of our retail operations, sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks and other course materials for the typical academic year, and lowest in the first and fourth fiscal quarters. Sales attributable to our wholesale business are generally highest in our first, second and third quarters, as MBS sells textbooks and other course materials for retail distribution. Our DSS segment sales and operating profit are realized relatively consistently throughout the year.

Use of Estimates

Use of Estimates

In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Merchandise Inventories

Merchandise Inventories

Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. Market value of our inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation. Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory, which includes certain significant assumptions, including markdowns, sales below cost, inventory aging and expected demand.

Cost is determined primarily by the retail inventory method for our Retail segment and last-in first out, or “LIFO”, method for our Wholesale segment. Our textbook inventories, for Retail and Wholesale, and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of our inventories.

For our physical bookstores, we also estimate and accrue shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends.

The Retail Segment fulfillment order is directed first to our wholesale business before other sources of inventory are utilized. The products that we sell originate from a wide variety of domestic and international vendors. After internal sourcing, the bookstore purchases textbooks from outside suppliers and publishers.

As contemplated by the FLC Partnership merchandising agreement, we sold our logo and emblematic general merchandise inventory to FLC and received proceeds of $41,773, and recognized a merchandise inventory loss on the sale of $10,262 in cost of goods sold during the 52 weeks ended May 1, 2021 for the Retail Segment. The final inventory sale price was determined during the first quarter of Fiscal 2022, at which time, we received additional proceeds of $1,906, and recognized a merchandise inventory loss on the sale of $434 in cost of goods sold for the Retail Segment.

Textbook Rentals Inventories

Textbook Rental Inventories

Physical textbooks out on rent are categorized as textbook rental inventories. At the time a rental transaction is consummated, the book is removed from merchandise inventories and moved to textbook rental inventories at cost. The cost of the book is amortized down to its estimated residual value over the rental period. The related amortization expense is included in cost of goods sold. At the end of the rental period, upon return, the book is removed from textbook rental inventories and recorded in merchandise inventories at its amortized cost.

Revenue Recognition

Revenue Recognition and Deferred Revenue

Product sales and rentals

The majority of our revenue is derived from the sale of products through our bookstore locations, including virtual bookstores, and our bookstore affiliated e-commerce websites, and contains a single performance obligation. Revenue from sales of our products is recognized at the point in time when control of the products is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for the products. For additional information, see Note 3. Revenue.

Retail product revenue is recognized when the customer takes physical possession of our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by our customers for products ordered through our websites and virtual bookstores. Wholesale product revenue is recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer. Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of goods sold.

Revenue from the rental of physical textbooks, which contains a single performance obligation, is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer. Rental periods are typically for a single semester and are always less than one year in duration. We offer a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so. We record the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout. In these instances, we accelerate any remaining deferred rental revenue at the point of sale.

Revenue from the rental of digital textbooks, which contains a single performance obligation, is recognized at the point of sale. A software feature is embedded within the content of our digital textbooks, such that upon expiration of the rental term the customer is no longer able to access the content. While the digital rental allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, our performance obligation is complete.

We estimate returns based on an analysis of historical experience. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded.

For sales and rentals involving third-party products, we evaluate whether we are acting as a principal or an agent. Our determination is based on our evaluation of whether we control the specified goods or services prior to transferring them to the customer. There are significant judgments involved in determining whether we control the specified goods or services prior to transferring them to the customer including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service. For those transactions where we are the principal, we record revenue on a gross basis, and for those transactions where we are an agent to a third-party, we record revenue on a net basis. Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year.

We do not have gift card or customer loyalty programs. We do not treat any promotional offers as expenses. Sales tax collected from our customers is excluded from reported revenues. Our payment terms are generally 30 days and do not extend beyond one year.

Service and other revenue

Service and other revenue is primarily derived from DSS segment subscription-based service revenues and partnership marketing services which includes promotional activities and advertisements within our physical bookstores and web properties performed on behalf of third-party customers.

Subscription-based revenue, which contains a single performance obligation, is deferred and recognized based on the passage of time over the subscription period commencing at the point of sale, when control of the service transfers to the customer. The majority of subscriptions sold are one month in duration.

Partnership marketing agreements often include multiple performance obligations which are individually negotiated with our customers. For these arrangements that contain distinct performance obligations, we allocate the transaction price based on the relative standalone selling price method by comparing the standalone selling price (“SSP”) of each distinct performance obligation to the total value of the contract. The revenue is recognized as each performance obligation is satisfied, typically at a point in time for partnership marketing service and overtime for advertising efforts as measured based upon the passage of time for contracts that are based on a stated period of time or the number of impressions delivered for contracts with a fixed number of impressions.

Lessee, Leases [Policy Text Block]

We recognize lease assets and lease liabilities on the condensed consolidated balance sheets for substantially all lease arrangements as required by FASB ASC 842, Leases (Topic 842). Our portfolio of leases consists of operating leases comprised of operations agreements which grant us the right to operate on-campus bookstores at colleges and universities; real estate leases for office and warehouse operations; and vehicle leases. We do not have finance leases or short-term leases (i.e., those with a term of twelve months or less).

We recognize a right of use ("ROU") asset and lease liability in our condensed consolidated balance sheets for leases with a term greater than twelve months. Options to extend or terminate a lease are included in the determination of the ROU asset and lease liability when it is reasonably certain that such options will be exercised. Our lease terms generally range from one year to fifteen years and a number of agreements contain minimum annual guarantees, many of which are adjusted at the start of each contract year based on the actual sales activity of the leased premises for the most recently completed contract year.

Payment terms are based on the fixed rates explicit in the lease, including minimum annual guarantees, and/or variable rates based on: i) a percentage of revenues or sales arising at the relevant premises ("variable commissions"), and/or ii) operating expenses, such as common area charges, real estate taxes and insurance. For contracts with fixed lease payments, including those with minimum annual guarantees, we recognize lease expense on a straight-line basis over the lease term or over the contract year in order to best reflect the pattern of usage of the underlying leased asset and our minimum obligations arising from these types of leases. Our lease agreements do not contain any material residual value guarantees, material restrictions or covenants.

We used our incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable. We utilized an estimated collateralized incremental borrowing rate as of the effective date or the commencement date of the lease, whichever is later.

Cost of Sales, Policy [Policy Text Block]

Cost of Sales

Our cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.

Selling, General and Administrative Expenses, Policy [Policy Text Block]

Selling and Administrative Expenses

Our selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include long-term incentive plan compensation expense and general office expenses, such as merchandising, procurement, field support, finance and accounting, and operating costs related to our DSS segment subscription-based services business. Shared-service costs such as human resources, legal, treasury, information technology, and various other corporate level expenses and other governance functions, are not allocated to any specific reporting segment and are recorded in Corporate Services.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Evaluation of Goodwill and Other Long-Lived Assets As of October 30, 2021, we had $0, $0 and $4,700 of goodwill on our condensed consolidated balance sheet related to our Retail, Wholesale and DSS reporting units, respectively. In accordance with ASC 350-10, Intangibles - Goodwill and Other, we complete our annual goodwill impairment test as of the first day of the third quarter of each fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of the reporting unit exceeds its fair value.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets.

Consolidation, Subsidiaries or Other Investments, Consolidated Entities, Policy [Policy Text Block]

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.

Share Repurchase [Policy Text Block]

Share Repurchases On December 14, 2015, our Board of Directors authorized a stock repurchase program of up to $50,000, in the aggregate, of our outstanding Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). The stock repurchase program may be suspended, terminated, or modified at any time. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes.

Fair Values of Financial Instruments

In accordance with ASC No. 820, Fair Value Measurements and Disclosures, the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1—Observable inputs that reflect quoted prices in active markets

Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable

Level 3—Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions

Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable. The fair values of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values because of the short-term nature of these instruments, which are all considered Level 1. The fair value of short-term and long-term debt approximates its carrying value.

Net Earnings (Loss) Per Share

Earnings Per ShareBasic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

We recognize compensation expense for restricted stock awards and performance share awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense for these awards based on the number of awards expected to vest, which includes an estimated average forfeiture rate. We calculate the fair value of these awards based on the closing stock price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model and compensation expense is recognized ratably over the requisite service period regardless of whether the market condition is satisfied. For stock options granted with an "at market" exercise price, we determined the grant fair value using the Black-Scholes model and for stock options granted with "a premium" exercise price, we determined the grant date fair value using the Monte Carlo simulation model. The fair value models for stock options use assumptions that include the risk-free interest rate, expected volatility, expected dividend yield and expected term of the options.

Income Tax, Policy [Policy Text Block]

Income Taxes

As of October 30, 2021, other long-term liabilities includes $25,335 related to the long-term tax payable associated with the LIFO reserve. The LIFO reserve is impacted by changes in the consumer price index (“CPI”) and is dependent on the inventory levels at the end of our tax year (on or about January 31st) which is in the middle of our second largest selling cycle.

At the end of the most recent tax year, inventory levels declined as compared to the prior year resulting in approximately $745 of the LIFO reserve becoming currently payable. Given recent trends relating to the pricing and rental of textbooks, management believes that an additional portion of the remaining long-term tax payable associated with the LIFO reserve could be payable within the next twelve months. We are unable to predict future trends for CPI and inventory levels, therefore it is difficult to project with reasonable certainty how much of this liability will become payable within the next twelve months.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy

Restricted Cash

As of October 30, 2021 and October 31, 2020, we had restricted cash of $12,534 and $766, respectively, comprised of $11,637 and $0, respectively, in prepaid and other current assets in the consolidated balance sheet related to segregated funds for commission due to FLC for logo merchandise sales as per the FLC Partnership's merchandising agreement and $897 and $766, respectively, in other noncurrent assets in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

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Compensation Related Costs, Share Based Payments (Policies)	6 Months Ended
	Oct. 30, 2021
Share-based Payment Arrangement [Abstract]
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]	We recognize compensation expense for restricted stock awards and performance share awards ratably over the requisite service period of the award, which is generally three years. We recognize compensation expense for these awards based on the number of awards expected to vest, which includes an estimated average forfeiture rate. We calculate the fair value of these awards based on the closing stock price on the date the award was granted. For those awards with market conditions, we have determined the grant date fair value using the Monte Carlo simulation model and compensation expense is recognized ratably over the requisite service period regardless of whether the market condition is satisfied. For stock options granted with an "at market" exercise price, we determined the grant fair value using the Black-Scholes model and for stock options granted with "a premium" exercise price, we determined the grant date fair value using the Monte Carlo simulation model. The fair value models for stock options use assumptions that include the risk-free interest rate, expected volatility, expected dividend yield and expected term of the options.

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Revenue (Tables)

6 Months Ended

Oct. 30, 2021

Disaggregation of Revenue [Line Items]

Disaggregation of Revenue [Table Text Block]

Disaggregation of Revenue

The following table disaggregates the revenue associated with our major product and service offerings:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Retail
Product Sales (a)	$	546,358	$	517,837	$	735,416	$	659,663
Rental Income	49,648		43,653		62,672		54,457
Service and Other Revenue (b)	12,946		15,024		21,333		21,170
Retail Total Sales	$	608,952	$	576,514	$	819,421	$	735,290
Wholesale Sales	$	21,669	$	36,387	$	66,153	$	116,681
DSS Sales (c)	$	8,279	$	5,947	$	16,582	$	11,819
Eliminations (d)	$	(11,923)	$	(23,363)	$	(34,385)	$	(64,291)
Total Sales	$	626,977	$	595,485	$	867,771	$	799,499

(a)Effective April 4, 2021, as contemplated by the FLC Partnership's merchandising agreement, logo and emblematic general merchandise sales were fulfilled by FLC. During the first quarter of Fiscal 2022, as contemplated by the FLC Partnership's e-commerce agreement, we began to transition certain of our e-commerce sites to Fanatics e-commerce sites for logo and emblematic products. As the logo and emblematic general merchandise sales are fulfilled by FLC and Fanatics, we recognize commission revenue earned for these sales on a net basis in our condensed consolidated financial statements, as compared to the recognition of logo and emblematic general merchandise sales on a gross basis in the prior year.

(b)Service and other revenue primarily relates to brand partnerships and other service revenues.

(c)DSS sales primarily relate to direct-to-student subscription-based revenue.

(d)The sales eliminations represent the elimination of Wholesale sales and fulfillment service fees to Retail and the elimination of Retail commissions earned from Wholesale.

Contract with Customer, Asset and Liability [Table Text Block]

The following table presents changes in deferred revenue associated with our contract liabilities:

	26 weeks ended
	October 30, 2021		October 31, 2020
Deferred revenue at the beginning of period	$	18,139	$	13,373
Additions to deferred revenue during the period	82,515		91,051
Reductions to deferred revenue for revenue recognized during the period	(66,364)		(71,580)
Deferred revenue balance at the end of period	$	34,290	$	32,844

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Segment Reporting Segment Reporting (Tables)

6 Months Ended

Oct. 30, 2021

Segment Reporting Information [Line Items]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Summarized financial information for our reportable segments is reported below:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Sales:
Retail	$	608,952	$	576,514	$	819,421	$	735,290
Wholesale	21,669		36,387		66,153		116,681
DSS	8,279		5,947		16,582		11,819
Elimination	(11,923)		(23,363)		(34,385)		(64,291)
Total Sales	$	626,977	$	595,485	$	867,771	$	799,499
Gross Profit
Retail (a)	$	128,825	$	95,512	$	176,968	$	111,647
Wholesale	5,620		10,714		16,025		27,471
DSS	6,906		4,662		13,936		9,408
Elimination	4,208		4,397		(1,341)		(2,379)
Total Gross Profit	$	145,559	$	115,285	$	205,588	$	146,147
Depreciation and Amortization
Retail	$	8,669	$	9,985	$	18,076	$	20,555
Wholesale	1,364		1,322		2,664		2,617
DSS	1,902		1,855		3,801		4,020
Corporate Services	17		31		35		64
Total Depreciation and Amortization	$	11,952	$	13,193	$	24,576	$	27,256
Operating Income (Loss)
Retail	$	29,596	$	7,072	$	(1,760)	$	(47,744)
Wholesale	(131)		5,246		4,983		16,917
DSS	(2,301)		(2,196)		(3,617)		(3,651)
Corporate Services	(6,868)		(7,844)		(15,226)		(15,396)
Elimination	4,293		4,455		(1,244)		(2,308)
Total Operating Income (Loss)	$	24,589	$	6,733	$	(16,864)	$	(52,182)

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

	13 weeks ended				26 weeks ended
Reconciliation of segment Operating Income (Loss) to consolidated Income (Loss) Before Income Taxes:	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Total Operating Income (Loss)	$	24,589	$	6,733	$	(16,864)	$	(52,182)
Interest Expense, net	2,264		912		4,758		3,565
Income (Loss) Before Income Taxes	$	22,325	$	5,821	$	(21,622)	$	(55,747)

(a)    For the 26 weeks ended October 30, 2021, gross margin includes a merchandise inventory loss of $434 in the Retail Segment. See Note 2. Summary of Significant Accounting Policies - Merchandise Inventories.

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Net Earnings (Loss) Per Share (Tables)

6 Months Ended

Oct. 30, 2021

Reconciliation of Basic and Diluted Loss Per Share

The following is a reconciliation of the basic and diluted earnings per share calculation:

	13 weeks ended				26 weeks ended
(shares in thousands)	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Numerator for basic earnings per share:
Net income (loss) available to common shareholders	$	22,528	$	7,515	$	(21,818)	$	(39,137)
Less allocation of earnings to participating securities	(64)		(6)		—		—
Net income (loss) available to common shareholders	$	22,464	$	7,509	$	(21,818)	$	(39,137)
Numerator for diluted earnings per share:
Net income (loss) available to common shareholders	$	22,464	$	7,509	$	(21,818)	$	(39,137)
Allocation of earnings to participating securities	64		6		—		—
Less diluted allocation of earnings to participating securities	(61)		(6)		—		—
Net income (loss) available to common shareholders	$	22,467	$	7,509	$	(21,818)	$	(39,137)
Denominator for basic earnings per share:
Basic weighted average shares of Common Stock	51,666		48,804		51,570		48,608
Denominator for diluted earnings per share:
Basic weighted average shares of Common Stock	51,666		48,804		51,570		48,608
Average dilutive restricted stock units	611		235		—		—
Average dilutive performance shares	—		—		—		—
Average dilutive restricted shares	126		18		—		—
Average dilutive performance share units	255		224		—		—
Average dilutive stock options	1,910		147		—		—
Diluted weighted average shares of Common Stock	54,568		49,428		51,570		48,608
Earnings (Loss) per share of Common Stock:
Basic	$	0.43	$	0.15	$	(0.42)	$	(0.81)
Diluted	$	0.41	$	0.15	$	(0.42)	$	(0.81)

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Fair Value Measures and Disclosures (Tables)	6 Months Ended
	Oct. 30, 2021
Fair Value Disclosures [Abstract]
Fair Value Measurements, Nonrecurring

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Leases (Tables)

6 Months Ended

Oct. 30, 2021

Leases [Abstract]

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

The following table summarizes our minimum fixed lease obligations, excluding variable commissions, as of October 30, 2021:

	As of
	October 30, 2021
Remainder of Fiscal 2022	$	91,979
Fiscal 2023	53,262
Fiscal 2024	43,624
Fiscal 2025	39,912
Fiscal 2026	28,939
Thereafter	72,832
Total lease payments	330,548
Less: imputed interest	(40,773)
Operating lease liabilities at period end	$	289,775

Supplemental Operating Lease Disclosures [Table Text Block]

The following summarizes additional information related to our operating leases:

	As of
	October 30, 2021			October 31, 2020
Weighted average remaining lease term (in years)	5.3 years			5.5 years
Weighted average discount rate	4.6		%	4.5		%
Supplemental cash flow information:
Cash payments for lease liabilities within operating activities	$	64,103		$	53,667
ROU assets obtained in exchange for lease liabilities from initial recognition	$	77,811		$	110,834

Lease, Cost

The following table summarizes lease expense:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Variable lease expense	$	30,738	$	27,275	$	42,440	$	34,682
Operating lease expense	48,990		49,635		65,363		59,431
Net lease expense	$	79,728	$	76,910	$	107,803	$	94,113

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Stock-Based Compensation Stock-Based Compensation (Tables)

6 Months Ended

Oct. 30, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

We recognized compensation expense for long-term incentive plan awards in selling and administrative expenses as follows:

	13 weeks ended				26 weeks ended
	October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Stock-based awards
Restricted stock expense	$	119	$	20	$	207	$	50
Restricted stock units expense	931		976		1,661		2,335
Performance share units expense	29		73		63		205
Stock option expense	399		111		669		111
Sub-total stock-based awards:	$	1,478	$	1,180	$	2,600	$	2,701
Cash settled awards
Phantom share units expense	$	2,452	$	224	$	4,924	$	224
Total compensation expense for long-term incentive awards	$	3,930	$	1,404	$	7,524	$	2,925

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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	May 01, 2021	Oct. 30, 2021	Oct. 31, 2020
Operating Lease, Right-of-Use Asset		$ 240,456	$ 252,650	$ 286,038
Operating Lease, Liability			289,775
Goodwill		4,700	4,700	4,700
Property, Plant and Equipment, Net		89,172	91,875	93,130
Intangible Assets, Net (Excluding Goodwill)		150,904	141,847	166,140
Liabilities, Current		372,962	574,267	569,741
Other Deferred Compensation Arrangements, Liability, Current				130
Restricted Cash			12,534	766
Restricted Cash, Current			11,637	0
Restricted Cash, Noncurrent			897	$ 766
Inventories
Proceeds from Sale of Other Assets	$ 1,906	41,773
Gain (Loss) on Disposition of Other Assets		$ 10,262	434
Deferred Tax Asset Current [Member]
Liabilities, Noncurrent			25,335
Liabilities, Current			745
Wholesale [Member]
Goodwill			0
DSS [Member]
Goodwill			4,700
Retail Segment [Member]
Goodwill			$ 0

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020	May 01, 2021	May 02, 2020
Disaggregation of Revenue [Line Items]
Revenues	$ 626,977	$ 595,485	$ 867,771	$ 799,499
Rental income	49,648	43,653	62,672	54,457
Contract with Customer, Asset, Net	0	0	0	0	$ 0
Deferred Revenue, Current	29,820	32,844	29,820	32,844	13,469
Deferred Revenue, Noncurrent	4,470	0	4,470	0	4,670
Deferred Revenue	34,290	32,844	34,290	32,844	$ 18,139	$ 13,373
Deferred Revenue, Additions			82,515	91,051
Contract with Customer, Liability, Revenue Recognized			(66,364)	(71,580)
Corporate, Non-Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	(11,923)	(23,363)	(34,385)	(64,291)
Retail Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	608,952	576,514	819,421	735,290
Rental income	49,648	43,653	62,672	54,457
Retail Segment [Member] | Retail Product [Member]
Disaggregation of Revenue [Line Items]
Revenues	546,358	517,837	735,416	659,663
Retail Segment [Member] | Service and Other [Member]
Disaggregation of Revenue [Line Items]
Revenues	12,946	15,024	21,333	21,170
Wholesale [Member]
Disaggregation of Revenue [Line Items]
Revenues	21,669	36,387	66,153	116,681
DSS [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 8,279	$ 5,947	$ 16,582	$ 11,819

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Segment Reporting Segment Reporting (Details) $ in Thousands	3 Months Ended			6 Months Ended
	Oct. 30, 2021 USD ($) Store	May 01, 2021 USD ($)	Oct. 31, 2020 USD ($)	Oct. 30, 2021 USD ($) Store segment	Oct. 31, 2020 USD ($)
Segment Reporting Information [Line Items]
Number of Reportable Segments | segment				3
Number of Stores | Store	1,445			1,445
Revenues	$ 626,977		$ 595,485	$ 867,771	$ 799,499
Gross Profit	145,559		115,285	205,588	146,147
Depreciation and amortization expense	11,952		13,193	24,576	27,256
Operating Income (Loss)	24,589		6,733	(16,864)	(52,182)
Interest expense, net	2,264		912	4,758	3,565
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest	22,325		5,821	(21,622)	(55,747)
Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	(11,923)		(23,363)	(34,385)	(64,291)
Gross Profit	4,208		4,397	(1,341)	(2,379)
Operating Income (Loss)	4,293		4,455	(1,244)	(2,308)
Inventories
Segment Reporting Information [Line Items]
Gain (Loss) on Disposition of Other Assets		$ 10,262		434
Retail Segment [Member]
Segment Reporting Information [Line Items]
Revenues	608,952		576,514	819,421	735,290
Gross Profit	128,825		95,512	176,968	111,647
Depreciation and amortization expense	8,669		9,985	18,076	20,555
Operating Income (Loss)	$ 29,596		7,072	$ (1,760)	(47,744)
Wholesale [Member]
Segment Reporting Information [Line Items]
Number of Wholesale Customers | Store				3,200
Number of System Customers | Store	400			400
Revenues	$ 21,669		36,387	$ 66,153	116,681
Gross Profit	5,620		10,714	16,025	27,471
Depreciation and amortization expense	1,364		1,322	2,664	2,617
Operating Income (Loss)	(131)		5,246	4,983	16,917
DSS [Member]
Segment Reporting Information [Line Items]
Revenues	8,279		5,947	16,582	11,819
Gross Profit	6,906		4,662	13,936	9,408
Depreciation and amortization expense	1,902		1,855	3,801	4,020
Operating Income (Loss)	(2,301)		(2,196)	(3,617)	(3,651)
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Revenues	(11,923)		(23,363)	(34,385)	(64,291)
Depreciation and amortization expense	17		31	35	64
Operating Income (Loss)	$ (6,868)		$ (7,844)	$ (15,226)	$ (15,396)
Physical Stores [Member]
Segment Reporting Information [Line Items]
Number of Stores | Store	794			794
Virtual Stores [Member]
Segment Reporting Information [Line Items]
Number of Stores | Store	651			651

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Net Earnings (Loss) Per Share - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Oct. 30, 2021	Jul. 31, 2021	Oct. 31, 2020	Aug. 01, 2020	Oct. 30, 2021	Oct. 31, 2020	Dec. 14, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock Repurchase Program, Authorized Amount							$ 50,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 26,669				$ 26,669
Shares Paid for Tax Withholding for Share Based Compensation					238,170
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	523,447		1,932,628		3,771,594	2,849,291
Net Income (Loss) Attributable to Parent	$ 22,528	$ (44,346)	$ 7,515	$ (46,652)	$ (21,818)	$ (39,137)
Undistributed Earnings (Loss) Available to Common Shareholders, Basic	$ (64)		$ (6)		$ 0	$ 0
Weighted Average Number of Shares Outstanding, Basic	51,666,000		48,804,000		51,570,000	48,608,000
Earnings Per Share, Basic	$ 0.43		$ 0.15		$ (0.42)	$ (0.81)
Earnings Per Share, Diluted	$ 0.41		$ 0.15		$ (0.42)	$ (0.81)
Weighted Average Number of Shares Outstanding, Basic and Diluted	51,666,000		48,804,000		51,570,000	48,608,000
Average dilutive restricted stock units	611,000		235,000		0	0
Average dilutive performance shares	0		0		0	0
Net Income (Loss) Available to Common Stockholders, Basic	$ 22,464		$ 7,509		$ (21,818)	$ (39,137)
Weighted Average Number of Shares Outstanding, Diluted	54,568,000		49,428,000		51,570,000	48,608,000
Net Income (Loss) Available to Common Stockholders, Diluted	$ 22,464		$ 7,509
Undistributed Earnings, Basic	64		6		$ 0	$ 0
Undistributed Earnings (Loss) Allocated to Participating Securities, Diluted	(61)		(6)		0	0
Net Income (Loss) Attributable to Parent, Diluted	$ 22,467		7,509		$ (21,818)	(39,137)
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	13,409,345				13,409,345
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized					3,000,000
Other Deferred Compensation Arrangements, Liability, Current and Noncurrent			224			224
Other Deferred Compensation Arrangements, Liability, Current			130			130
Other Deferred Compensation Arrangements, Liability, Classified, Noncurrent			$ 94			$ 94
Average dilutive stock options	1,910,000		147,000		0	0
Average Dilutive Performance Share Units	255,000		224,000		0	0
Average dilutive restricted shares	126,000		18,000		0	0

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Fair Values of Financial Instruments Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Oct. 30, 2021	Oct. 31, 2020
Fair Value Disclosures [Abstract]
Other Deferred Compensation Arrangements, Liability, Classified, Noncurrent		$ 94
Other Deferred Compensation Arrangements, Liability, Current and Noncurrent		224
Other Deferred Compensation Arrangements, Liability, Current		130
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Deferred Compensation Arrangements, Liability, Current		130
Other Deferred Compensation Arrangements, Liability, Classified, Noncurrent		$ 94
Phantom Share Units (PSUs)
Fair Value Disclosures [Abstract]
Other Deferred Compensation Arrangements, Liability, Classified, Noncurrent	$ 1,129
Other Deferred Compensation Arrangements, Liability, Current and Noncurrent	3,474
Other Deferred Compensation Arrangements, Liability, Current	2,345
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Deferred Compensation Arrangements, Liability, Current	2,345
Other Deferred Compensation Arrangements, Liability, Classified, Noncurrent	$ 1,129

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Credit Facility - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	May 01, 2021
Line of Credit Facility [Line Items]
Line Of Credit Potential Increase Amount	$ 100,000
Proceeds from Lines of Credit	259,720	$ 330,800
Repayments of Lines of Credit	254,020	406,000
Long-term Line of Credit, Noncurrent	183,300	99,500	$ 127,600
Short-term Debt	0	0	$ 50,000
Letters of Credit Outstanding, Amount	4,759	4,759
Debt, Long-term and Short-term, Combined Amount	183,300	$ 99,500
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 500,000
New Credit Facility [Member]
Line of Credit Facility [Line Items]
Credit Facility Maturity Term	5 years
Line of Credit Facility, Maximum Borrowing Capacity	$ 400,000
FILO [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 100,000

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Leases Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Leases [Abstract]
Operating Lease, Weighted Average Remaining Lease Term	5 years 3 months 18 days	5 years 6 months	5 years 3 months 18 days	5 years 6 months
Variable Lease, Cost	$ 30,738	$ 27,275	$ 42,440	$ 34,682
Lease, Cost	48,990	49,635	65,363	59,431
Operating Lease, Expense	79,728	$ 76,910	107,803	$ 94,113
Lessee, Operating Lease, Liability, Payments, Due Year Two	53,262		53,262
Lessee, Operating Lease, Liability, Payments, Due Year Three	43,624		43,624
Lessee, Operating Lease, Liability, Payments, Due Year Four	39,912		39,912
Lessee, Operating Lease, Liability, Payments, Due Year Five	28,939		28,939
Lessee, Operating Lease, Liability, Payments, Due after Year Five	72,832		72,832
Lessee, Operating Lease, Liability, Payments, Due	330,548		330,548
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	40,773		40,773
Operating Lease, Liability	$ 289,775		$ 289,775
Operating Lease, Weighted Average Discount Rate, Percent	4.60%	4.50%	4.60%	4.50%
Operating Lease, Payments			$ 64,103	$ 53,667
ROU Asst Obtained in Exchange for Lease Liabilites			77,811	$ 110,834
Lessee, Operating Lease, Liability, to be Paid, Year One	$ 91,979		$ 91,979

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Supplementary Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Restructuring and other charges	$ 1,116	$ 3,387	$ 3,739	$ 9,058
Employee Severance [Member]
Restructuring and other charges	418	1,075	1,968	4,471
Other Restructuring [Member]
Restructuring and other charges	698	2,312	1,771	4,587
Employee Severance [Member]
Accrued Salaries	$ 754	$ 7,092	$ 754	$ 7,092

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Stock-Based Compensation Stock-Based Compensation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation			$ 2,600,000	$ 2,701,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 21,487,000		$ 21,487,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			2 years 9 months 18 days
Other Deferred Compensation Arrangements, Liability, Current and Noncurrent		$ 224,000		224,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			35,412
Restricted Stock Units (RSUs) [Member] | Share-based Payment Arrangement, Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			809,282
Restricted Stock Units (RSUs) [Member] | us-gaap_ShareBasedPaymentArrangementBODMember
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			47,216
Equity Option | OptionsAtMarket [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option Indexed to Issuer's Equity, Strike Price			$ 10.80
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used			Black-Scholes
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			0.94%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term			6 years 2 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			74.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 7.10		$ 7.10
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			322,495
Equity Option | OptionsAtPremium [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option Indexed to Issuer's Equity, Strike Price			$ 13.30
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used			Monte Carlo
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			0.94%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term			10 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			74.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 6.73		$ 6.73
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			348,723
Phantom Share Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Other Deferred Compensation Arrangements, Liability, Current and Noncurrent	$ 3,474,000		$ 3,474,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			183,348
Phantom Share Units (PSUs) | Phantom Share Grant 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 8.50		$ 8.50
ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsVolatility			78%-92%
ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMaximum			0.08%-0.53%
Share-based Compensation Arrangement by Share-based Payment Award, Description, Maximum Settlement Price			$ 32.40
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation	$ 1,478,000	1,180,000	2,600,000	2,701,000
us-gaap_LongTermIncentivePlanCompensation [Line Items]	3,930,000	1,404,000	7,524,000	2,925,000
Selling, General and Administrative Expenses [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation	119,000	20,000	207,000	50,000
Selling, General and Administrative Expenses [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation	931,000	976,000	1,661,000	2,335,000
Selling, General and Administrative Expenses [Member] | Performance Share Units (PSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation	29,000	73,000	63,000	205,000
Selling, General and Administrative Expenses [Member] | Equity Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation	399,000	111,000	669,000	111,000
Selling, General and Administrative Expenses [Member] | Phantom Share Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred Compensation Arrangement with Individual, Compensation Expense	$ 2,452,000	$ 224,000	$ 4,924,000	$ 224,000

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Income Taxes Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 30, 2021	Oct. 31, 2020	Oct. 30, 2021	Oct. 31, 2020
Income Tax Disclosure [Abstract]
Income Tax Expense (Benefit)	$ (203)	$ (1,694)	$ 196	$ (16,610)
Effective Income Tax Rate Reconciliation, Percent	(0.90%)	(29.10%)	(0.90%)	29.80%
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest	$ 22,325	$ 5,821	$ (21,622)	$ (55,747)