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Aug 27 – Sept 3, 2009 Edition Borders Q2 Sales Fall Sharply, Debts Slashed
ANN ARBOR, Mich. (AUTHORLINK NEWS, August 25, 2009Borders Group today reported a 17.7% drop in sales for the second quarter ended August 1, 2009, compared to the same period a year ago. Total consolidated sales were $616.8 million.
Comparable store sales declined by 17.9% and 10.8% at Borders superstores and Waldenbooks Specialty Retail stores, respectively. Excluding multimedia, comparable store sales at Borders declined by 13.0%.
On an operating basis, the company generated a loss from continuing operations of $12.7 million compared to a loss of $10.5 million a year ago. On a GAAP basis, the loss from continuing operations was $45.6 million compared to a loss of $11.3 million a year ago.
On the brighter side, Borders reduced its debt by 42.5% ($179.3 million) at the end of the second quarter to $242.5 million. However, inventory was also reduced by $201.3 million, and multimedia inventory was reduced by $57.3 million.
The second quarter was a transitional one as we made significant space and inventory reductions to strategically position declining categories for profitability while further developing businesses that have potential, said Borders Group Chief Executive Officer Ron Marshall. While this transition impacted sales in the short run, our stores are now better positioned to drive improved sales in the back half of the year. Further, we are pleased that even with the level of transformation we undertook in the second quarter, our financial disciplines remained intact and we continued to strengthen our balance sheet by cutting debt, generating positive cash flow, reducing inventory and tightly managing working capital. The big changes for the year are behind us now and the challenge is to deliver on the opportunity we have created to drive sales.
Two Borders superstores were closed in the second quarter, ending the period with 513 locations.
Waldenbooks Specialty Retail
Total sales in the second quarter within the Waldenbooks Specialty Retail segment were $74.5 million, a 23.1% decline compared to the same period in 2008 as the number of stores was decreased to 370 at the end of the second quarter this year compared to 468 stores that were open at the close of the same period a year ago. The company closed six Waldenbooks locations in the second quarter of this year. Comparable store sales in the second quarter at Waldenbooks decreased by 10.8%.
On an operating basis, the segment generated an operating loss of $2.9 million in the second quarter compared to an operating loss of $6.7 million for the same period in 2008. On a GAAP basis, the segment generated a second quarter operating loss of $3.1 million compared to an operating loss of $7.7 million for the same period in 2008.
Total sales within the International segment (which consists primarily of Paperchase) totaled $28.7 million in the second quarter, which is down by 5.6% compared to a year ago. Excluding the impact of foreign currency translation, segment sales increased by 10.4% for the period.
Headquartered in Ann Arbor, Mich., Borders Group, Inc. (NYSE: BGP) is a leading retailer of books, music and movies with more than 25,000 employees. Through its subsidiaries, the company operates approximately 1,000 stores worldwide primarily under the Borders® and Waldenbooks® brand names. For online shopping, visit Borders.com.