Barnes & Noble Education, Inc. (NYSE: BNED), one of the largest contract operators of bookstores on college and university campuses across the United States and a leading provider of digital education services, today reported sales and earnings for the third quarter for fiscal 2017.

Financial highlights for the third quarter 2017 and fiscal year to date 2017:

• Third quarter sales of $521.6 million increased 0.6% as compared to the prior year period; year to date sales of $1,531.5 million increased 1.2% as compared to the prior year period.
• Third quarter comparable store sales decreased 4.9%; year to date comparable store sales decreased 3.6%.
• Third quarter GAAP net income of $3.8 million, as compared to a net loss of $(3.6) million in the prior year period; year to date net income was $5.1 million, as compared to $2.9 million in the prior year period.
• Third quarter non-GAAP Adjusted EBITDA of $18.8 million, a decrease of $5.4 million as compared to the prior year period; year to date non-GAAP Adjusted EBITDA of $52.7 million, a decrease of $9.0 million as compared to the prior year period.
• Third quarter non-GAAP Adjusted Earnings of $4.0 million, as compared to $5.8 million in the prior year period; year to date non-GAAP Adjusted Earnings of $7.8 million, as compared to $12.3 million in the prior year period.

Operational highlights for the third quarter 2017:

• Completed expansion of price match program to remaining textbook stores.
• Web sales increased for textbook and general merchandise offerings, slowing the negative general merchandise trend from the fall semester.
• Gained traction with Barnes & Noble Education Courseware, with continued adoptions for the fall 2017 back to school selling season.

Comparable store sales decreased 4.9% for the quarter or $25.0 million, driven largely by lower textbook sales of $23.1 million. Consistent with prior years, the Spring Rush period extended beyond the quarter end due to later school openings and the continued pattern of students buying course materials later in the semester. Factoring in the three additional weeks of February, comparable store sales decreased 3.3% on a year to date basis.

“In the third quarter, the trends we saw in the second quarter continued, including lower enrollments, a competitive market for textbook sales and a soft retail environment, all of which contributed to comparable store sales declines. We have taken decisive steps to address the dynamic market environment, including expanding our price match program and enhancing our suite of affordable learning materials with OER courseware,” said Max J. Roberts, Chief Executive Officer, Barnes & Noble Education.

“We remain confident in our ability to capitalize on expected long-term industry trends, including future enrollment growth, an increasing focus on affordability and the evolution toward digital solutions. We also continue to be well-positioned to build market share, as more schools turn to outsourced bookstore operations. Our acquisition of MBS Textbook Exchange, LLC (“MBS”), also announced today, will accelerate our strategy, enabling us to generate more value from the textbook marketplace, increase our addressable market for bookstores and expand revenue opportunities for our digital courseware and analytics. With MBS, we are better positioned to broaden our reach and deepen our institutional partnerships through our ability to provide unmatched access to a comprehensive suite of flexible and affordable learning solutions.”

Third Quarter 2017 Results

Results for the 13 and 39 weeks of fiscal 2017 and fiscal 2016 are as follows:

Third quarter sales of $521.6 million increased $3.2 million, or 0.6%, as compared to the prior year period. This increase was attributable to new store growth partially offset by lower comparable store sales.

Third quarter net income was $3.8 million, or $0.08 per diluted share, compared to net loss of $(3.6) million, or $(0.07) per diluted share, in the prior year period. The current year’s fiscal quarter has 46.8 million diluted shares outstanding, while the prior year period had 48.1 million diluted shares outstanding. The Company reported non-GAAP Adjusted Earnings of $4.0 million during the quarter, compared with $5.8 million in the prior year period.

The Company’s Adjusted EBITDA was $18.8 million for the quarter, as compared to $24.2 million in the prior year period, due primarily to lower comparable store sales.

Outlook

For fiscal year 2017, the Company expects total sales to grow by approximately 2.5%, while comparable store sales are expected to decrease by approximately 3.0% compared to the prior year. The Company expects Adjusted EBITDA to increase on a percentage basis in the mid-single digits compared with the prior year and expects capital expenditures to be approximately $40 million.

Note: These expected results for fiscal 2017 exclude financial results for MBS from the date of the acquisition to April 29, 2017 and any transaction and integration costs.

Conference Call

A conference call with Barnes & Noble Education, Inc. senior management will be webcast at 10:00 a.m. Eastern Time on Tuesday, February 28, 2017 and can be accessed at the Barnes & Noble Education, Inc. corporate website at www.bned.com.

Barnes & Noble Education, Inc. expects to report fiscal 2017 fourth quarter results on or about July 12, 2017.

ABOUT BARNES & NOBLE EDUCATION, INC.

Barnes & Noble Education, Inc. (NYSE: BNED), one of the largest contract operators of bookstores on college and university campuses across the United States and a leading provider of digital education services, enhances the academic and social purpose of educational institutions. Through its Barnes & Noble College and MBS subsidiaries, Barnes & Noble Education operates 1,490 physical and virtual bookstores and serves more than 6 million students enrolled in higher education institutions, delivering essential educational content and tools within a dynamic retail environment. Through its Digital Education subsidiary, Barnes & Noble Education offers a suite of digital software, content and services that include a sophisticated digital learning management platform that has competency-based features, analytics capabilities, courseware offerings and a digital eTextbook reading product. Barnes & Noble Education acts as a strategic partner to drive student success; provide value and support to students and faculty; and create loyalty and improve retention, all while supporting the financial goals of college and university partners.

General information on Barnes & Noble Education, Inc. can be obtained by visiting the Company's corporate website: www.bned.com.

Forward-Looking Statements

This press release 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 press release 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: general competitive conditions, including actions our competitors 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 bookstore operations or change the operation of their bookstores; the general economic environment and consumer spending patterns; decreased consumer demand for our products, low growth or declining sales; our ability to successfully integrate the operations of MBS into our Company; the anticipated benefits of the MBS acquisition may not be fully realized or may take longer than expected; the integration of MBS’s operations into our own may also increase the risk of our internal controls being found ineffective; restructuring 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, and further enhancements to Yuzu® and any future higher education digital products, and the inability to achieve the expected cost savings; our ability to successfully implement our strategic initiatives including our ability to identify and execute upon additional acquisitions and strategic investments; technological changes; our international expansion could result in additional risks; our ability to attract and retain employees; changes to payment terms, return policies, the discount or margin on products or other terms with our suppliers; 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 contracts and higher-than-anticipated store closings; disruptions to our computer systems, data lines, telephone systems or supply chain, including the loss of suppliers; work stoppages or increases in labor costs; possible increases in shipping rates or interruptions in shipping service, effects of competition; obsolete or excessive inventory; product shortages; changes in law or regulation; 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 or tax-related proceedings or audits; changes in accounting standards; challenges to running our company independently from Barnes & Noble, Inc. following the Spin-Off; the potential adverse impact on our business resulting from the Spin-Off; 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 year ended April 30, 2016. 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 press release.

EXPLANATORY NOTE

On February 26, 2015, Barnes & Noble, Inc. (“Barnes & Noble”) announced plans for the complete legal and structural separation of Barnes & Noble Education, Inc. (the “Company”) from Barnes & Noble (the “Spin-Off”). Under the Separation and Distribution Agreement between Barnes & Noble and the Company, Barnes & Noble distributed all of its equity interest in the Company, consisting of all of the outstanding shares of the Company's Common Stock, to Barnes & Noble’s stockholders on a pro rata basis.

On July 14, 2015, Barnes & Noble approved the final distribution ratio and declared a pro rata dividend of the outstanding shares of the Company's Common Stock, par value $0.01 per share ("Common Stock"), to Barnes & Noble’s existing stockholders. The pro rata dividend was made on August 2, 2015 to the Barnes & Noble stockholders of record (as of July 27, 2015). Each Barnes & Noble stockholder of record received a distribution of 0.632 shares of the Company's Common Stock for each share of Barnes & Noble common stock held on the record date. Following the Spin-Off, Barnes & Noble does not own any equity interest in the Company.

On August 2, 2015, the Company completed the legal separation from Barnes & Noble, at which time the Company began to operate as an independent publicly-traded company. The Company's Common Stock began to trade on a “when-issued” basis on the NYSE under the symbol “BNED WI” beginning on July 23, 2015. On August 3, 2015, when-issued trading of the Company's Common Stock ended, the Company's Common Stock began “regular-way” trading under the symbol “BNED.”

The results of operations for the 13 weeks ended August 1, 2015 reflected in the Company's condensed consolidated financial statements are presented on a stand-alone basis since the Company was still part of Barnes & Noble, Inc. until the consummation of the Spin-Off on August 2, 2015, and the results of operations for the 13 and 39 weeks ended January 28, 2017 and the 26 weeks ended January 30, 2016 reflected in the Company's condensed consolidated financial statements are presented on a consolidated basis as the Company became a separate consolidated entity.

(a) We added 36 new stores and closed 17 stores during the 39 weeks ended January 28, 2017, ending the period with a total of 770 stores.

(b) Other revenue includes Promoversity, LoudCloud, brand partnerships, shipping & handling and revenue from other programs.

(c) Other includes certain adjusting items related to return reserves and other deferred items.

Effective for the first quarter of Fiscal 2017, comparable store sales includes sales from stores that have been open for an entire fiscal year period, does not include sales from closed stores for all periods presented, and digital agency sales are included on a gross basis. We believe the current comparable store sales calculation method better reflects the manner in which management views comparable sales, as well as the seasonal nature of our business. For periods presented prior to the first quarter of Fiscal 2017, comparable store sales includes sales from stores that have been open for at least 15 months, does not include sales from closed stores for all periods presented, and includes digital agency sales on a net basis.

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