Revenue of $290.6m missed the $306.7m consensus by $16.1m, or 5.2%, while the loss per share of $(0.37) came in ahead of the $(0.48) estimate.
Demand was not the problem: gross comparable store sales rose $10.7m, or 3.7%, and BNC First Day revenue grew 9.0% to $124.7m. The fleet shrank instead -- 34 stores opened against 88 closed, ending at 1,062 from 1,116, with closed stores subtracting $18.0m of sales.
Profitability improved on every line management tracks: net loss narrowed to $(12.9)m from $(18.3)m, Adjusted EBITDA to $(9.3)m from $(11.5)m, and gross margin to 19.6% of sales from 19.2%.
Fiscal 2027 Adjusted EBITDA guidance of $85m to $92m was reiterated, alongside roughly $20m of capital expenditures.
The one thing that matters: the shortfall is a smaller store base, not weaker demand, and with First Day Complete reaching more than 1.43 million students across 263 campuses this fall -- 26% more than last year -- the full-year target rests on the fall and spring terms that this seasonally smallest quarter cannot preview.
Key metrics
Metric
Reported
Prior year
Change
BNC First Day revenue
$124.7m
$114.4m
+9.0%
First Day Complete sales
$65.2m
$52.8m
+23.5%
Gross comparable store sales
+$10.7m
—
+3.7%
Adjusted EBITDA
$(9.3)m
$(11.5)m
+18.9% improvement
Gross margin
19.6% of sales
19.2% of sales
+40bps
Fall 2026 First Day Complete students
more than 1.43 million
—
+26% vs Fall 2025
Guidance changes
Item
New guidance
Prior guidance
Fiscal 2027 Adjusted EBITDA
$85 million to $92 million
—
Fiscal 2027 capital expenditures
approximately $20 million
—
Quality of earnings
The $5.4m improvement in net loss leans more on non-operating lines than on trading. Other (income) expense swung by $2.7m, to $1.2m of income from $1.5m of expense, driven by a $1.7m escrow release; depreciation and amortization fell $1.0m and net interest expense fell $1.0m on lower borrowings. Gross profit contributed $1.7m and selling and administrative expenses $0.5m.
Adjusted EBITDA of $(9.3)m excludes that escrow release, so the $2.2m improvement there is the cleaner read on the quarter; adjusted net loss of $(13.1)m was worse than the $(12.9)m reported net loss for the same reason.
Course materials carried the quarter and general merchandise did not: course material product sales rose 1.3% to $180.4m and general merchandise 2.1% to $76.0m, while service and other revenue fell 5.1% to $20.4m on lower liquidation sales and rental income fell 1.8% to $13.7m.
Gotchas & watch items
Total debt rose to $123.5m from $71.0m at the May 2, 2026 year-end as inventory built for the fall term, even though it is down from $170.0m a year ago; availability under the $325m facility stood at $113.4m.
Operating cash outflow of $(52.9)m and Adjusted Free Cash Flow of $(14.8)m mean cash on hand of $21.5m, of which $13.7m is restricted, is thin ahead of the heaviest working-capital quarters.
Disclosure controls remained ineffective as of August 1, 2026, with the previously disclosed material weaknesses in control environment, risk assessment, information and communication, and monitoring still unremediated.
No conference call accompanies these results -- management will next take questions after the second quarter -- so the fall First Day Complete ramp goes unexamined for another quarter.