It's not exactly beach reading, but two of the publicly held
bookselling chains reported quarterly sales and earnings results
yesterday. Barnes & Noble reports tomorrow.
Borders showed "strength in the core book business led by the release of Harry Potter and the Half-Blood Prince," as CEO Greg Josefowicz put it, and there was "continued strength in backlist titles" at superstores. But this quarter, in part because of the London bombings, sales in the U.K. faltered, slowing down the company's fast-growing international segment, and heavy investments in superstore remodeling and the conversion of some Waldenbooks to Borders Express outlets hurt the bottom line. Sales at stores open at least a year were solid in books, but overall comp-store figures were dragged down by dropping music sales.
In the quarter ended July 23, total consolidated sales at Borders rose 5.3% to $891.6 million compared to the same period a year ago while consolidated net income of $1.3 million declined from the $7.9 million in the same period last year. Heavy discounts on Harry Potter helped pull down gross margin as a percentage of sales to 25.5% from 26.3%.
Comp-store sales rose 1.8% at Borders superstores and 1.9% at the Waldenbooks Specialty Retail, which includes Walden, Borders Express, Borders Outlet and airport stores.
Sales at superstores rose 4.3% to $618.5 million. Comp-store book sales were up more than 6% but music sales dropped in the low double digits.
The company remodeled 36 Borders superstores during the quarter, bringing the total remodeled to 45. The company has found that sales in remodeled stores decline temporarily during the remodeling but then build and surpass sales of non-remodeled stores. The company plans to remodel 55 more superstores in the third quarter, completing the remodeling program in time for the holiday season. The remodeling emphasizes some strong categories, including gifts, stationery and the cafe business.
International sales rose 17.1% over the same period a year to $122.1 million, but this was less than expected because of a decline in comp-store sales in the "low single digits" at U.K. Borders and Books etc. stores, a combination of weak sales trends and the July bombings. (If currency fluctuations are taken into account, sales would have risen 14.6%.) U.K. sales comprise 70% of Borders's international sales. There are now 47 superstores outside the U.S.; the company may open nine more by the end of the fiscal year.
Waldenbooks Specialty Retail had sales of $151 million in the quarter, up 0.7%. Borders converted some 44 Walden stores in the quarter, bringing the total converted to 48. The company will convert up to 52 more Waldenbooks into Borders Express stores. The Borders Express locations, which now total 85, have same-store sales that are better than the Waldenbooks chain.
For the full year, Borders expects comp-store sales at its superstores to range from "flat to up slightly" while Walden Specialty Retail comp-sales will likely be "flat to down in the low single digits."
In other news, the company bought back some 2.4 million shares of its stock for $59.8 million. For the year to date, it has bought back 4.6 million shares for $117.5 million.
Borders showed "strength in the core book business led by the release of Harry Potter and the Half-Blood Prince," as CEO Greg Josefowicz put it, and there was "continued strength in backlist titles" at superstores. But this quarter, in part because of the London bombings, sales in the U.K. faltered, slowing down the company's fast-growing international segment, and heavy investments in superstore remodeling and the conversion of some Waldenbooks to Borders Express outlets hurt the bottom line. Sales at stores open at least a year were solid in books, but overall comp-store figures were dragged down by dropping music sales.
In the quarter ended July 23, total consolidated sales at Borders rose 5.3% to $891.6 million compared to the same period a year ago while consolidated net income of $1.3 million declined from the $7.9 million in the same period last year. Heavy discounts on Harry Potter helped pull down gross margin as a percentage of sales to 25.5% from 26.3%.
Comp-store sales rose 1.8% at Borders superstores and 1.9% at the Waldenbooks Specialty Retail, which includes Walden, Borders Express, Borders Outlet and airport stores.
Sales at superstores rose 4.3% to $618.5 million. Comp-store book sales were up more than 6% but music sales dropped in the low double digits.
The company remodeled 36 Borders superstores during the quarter, bringing the total remodeled to 45. The company has found that sales in remodeled stores decline temporarily during the remodeling but then build and surpass sales of non-remodeled stores. The company plans to remodel 55 more superstores in the third quarter, completing the remodeling program in time for the holiday season. The remodeling emphasizes some strong categories, including gifts, stationery and the cafe business.
International sales rose 17.1% over the same period a year to $122.1 million, but this was less than expected because of a decline in comp-store sales in the "low single digits" at U.K. Borders and Books etc. stores, a combination of weak sales trends and the July bombings. (If currency fluctuations are taken into account, sales would have risen 14.6%.) U.K. sales comprise 70% of Borders's international sales. There are now 47 superstores outside the U.S.; the company may open nine more by the end of the fiscal year.
Waldenbooks Specialty Retail had sales of $151 million in the quarter, up 0.7%. Borders converted some 44 Walden stores in the quarter, bringing the total converted to 48. The company will convert up to 52 more Waldenbooks into Borders Express stores. The Borders Express locations, which now total 85, have same-store sales that are better than the Waldenbooks chain.
For the full year, Borders expects comp-store sales at its superstores to range from "flat to up slightly" while Walden Specialty Retail comp-sales will likely be "flat to down in the low single digits."
In other news, the company bought back some 2.4 million shares of its stock for $59.8 million. For the year to date, it has bought back 4.6 million shares for $117.5 million.