AP News, May 30th, 2007
Losses are growing for the book retailer Borders Group Inc. as it faces a difficult sales environment and a shortage of exciting new releases.
The company said it lost $35.9 million, or 61 cents per share, in its fiscal first quarter ending May 5, compared with a loss of $20.2 million, or 31 cents per share, in the prior year quarter.
Excluding costs for store closings and other nonrecurring items, Borders said it lost $29.9 million, or 51 cents a share. Analysts surveyed by Thomson Financial, who typically estimate earnings excluding items, forecast a loss of 38 cents per share.
The sales environment is "more challenging than we anticipated," the company's chief executive, George Jones, said in a news release Tuesday. He said the results were in line with the company's own internal projections.
Stifel Nicolaus & Co. analyst David Schick said the first-quarter book release schedule had been "uneventful" compared to last year. Highlights include "The Secret" by Rhonda Byrne and new fiction by James Patterson and Janet Evanovich, he said.
Among big events in the current quarter is the July 21 release of the final Harry Potter novel.
Borders said its revenue rose 2 percent to $886 million in the first quarter of 2007. Analysts predicted revenue of $876 million for the quarter.
Sales at domestic Borders Superstores _ the chain's biggest division _ rose about 1 percent, while sales at Waldenbooks fell 15 percent in the quarter. International sales helped boost overall revenue, rising 22 percent.
Same-store sales, or sales at stores open at least a year, fell 1.9 percent at Borders stores, which accounted for 70.2 percent of total sales. They fell 1.0 percent at Waldenbooks and 2.5 percent at Borders' international superstores.
Same-store sales are a key measure of retailer performance since it counts growth at existing stores rather than newly opened ones.
The company said its margins were hurt by increased promotional discounts, occupancy costs and non-operating charges.
The company is in the midst of a restructuring plan that includes closing nearly half of its Waldenbooks stores, tailoring its superstores to local markets and possibly selling most of its international businesses.
In a May 21 note to investors, Schick said Borders would be focusing on its domestic superstore business while it holds back on store remodeling in preparation for "a new store prototype for 2008" and "switches to a proprietary e-commerce site."
Borders' Web site now takes shoppers to a site jointly operated by online retailer Amazon.com Inc.
Borders shares rose 4 cents to $23.36 in electronic after-hours trading. During regular trading hours, the shares fell 9 cents to $23.32.
___
On the Net:
Borders Group Inc.: http://www.bordersgroup.com
