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Investing.com -- Barnes & Noble Education (NYSE:BNED) stock fell 18.3% after the company disclosed an ongoing internal investigation into potential accounting irregularities that has delayed its annual report filing.
The educational materials provider revealed in a Form 12b-25 filing that it cannot submit its Annual Report on Form 10-K for the year ended May 3, 2025, on time due to an investigation launched by its Audit Committee. The company indicated it may have overstated its accounts receivable balance by up to $23 million as of fiscal year-end, potentially impacting reported results for fiscal years 2024 and 2025.
According to the filing, the investigation was triggered by information regarding the recording of cost of digital sales that came to management’s attention in July 2025. The company believes the discrepancies "may have resulted from the actions of a payment processing employee," who has been suspended pending investigation results.
Despite the accounting issues, Barnes & Noble Education reported that its total sales increased by $40.5 million to $1.61 billion (unaudited) in fiscal year 2025. The company’s BNC First Day total revenue grew by $119.9 million, or 25.3%, to $593.8 million (unaudited) compared to $473.9 million in the prior year.
The company also expects to report total net debt of $94.0 million (unaudited) at fiscal year-end 2025, representing a decrease of $91.8 million from the $185.8 million reported at the end of fiscal 2024. Barnes & Noble Education anticipates remaining in compliance with its credit agreement financial covenants.
Management is assessing the impact on its internal controls and expects to report at least one material weakness related to the review and approval of manual journal entries. The company believes its internal control over financial reporting and disclosure controls were not effective as of both April 27, 2024, and May 3, 2025.
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