Although book sales at the company's superstores were "solid, led by
strength in backlist titles," generally Borders Group had a
disappointing third quarter, ended October 22. Music sales were offkey,
and the news from the U.K. was dreary. "Overall sales trends" and the
cost of remodeling several hundred stores, now complete for the year,
dragged down earnings. But the remodeled stores outperformed other stores
by several percentage points.
Total consolidated sales rose 0.5% to $837.2 million, and the net loss was $14.1 million compared to a net loss of $1.1 million in the same period a year ago. The company had previously revised estimates of earnings downward, and yesterday's results came in slightly below analysts' estimates.
Still, Borders CEO Greg Josefowicz looked ahead positively, commenting that "with this year's remodel activities behind us, a solid inventory position in our stores and a promotional program in place, we are prepared for the upcoming holiday shopping season."
For the fourth quarter, the company expects earnings to be near or above last year's. At Borders superstores open at least a year, sales should be flat to down in the low single digits. At Waldenbooks Specialty Retail, which includes Borders Express, Borders Outlet, airport stores and seasonal business, comp-store sales will likely decline in the low to high single digits. International sales are expected to rise 6%-12%.
The Divisions
During the quarter, comp-store sales at Borders superstores fell 0.2% while overall sales rose 1.6% to $572.9 million. At the superstores, comp-store book sales rose 3% while comp-store music sales fell 15%. The company remodeled 55 stores during the quarter, finishing the remodeling program, which involved 100 superstores altogether. On a comp-store basis, the remodeled stores outperformed the rest of the superstores by about 2%. The company opened two superstores in the quarter and plans to open nine more in the fourth quarter--for a total of 17 superstore openings during the year.
At Waldenbooks Specialty Retail, comp-store sales fell 5.2% and sales dropped 8.1% to $138.4 million. The company converted 50 Waldenbooks to Borders Express, for a total of 98 conversions during the year to date. Like the remodeled superstores, the converted Borders Express stores outperformed the overall Walden chain by about 2.5% on a comp-store basis.
International sales increased 6.2% to $125.9 million, a less-blistering pace than in some quarters. In the U.K., comp-store sales at Borders superstores dropped 5% and at Books etc. stores fell 10%. In the third quarter, Borders opened three more stores abroad, for a total of 50 stores outside the U.S. In the fourth quarter, Borders will open six superstores, for a total of 15 new stores for the year, which includes two franchise stores in Malaysia.
The company continued its repurchasing program, buying back 2.5 million shares of its common stock for $55.2 million. During the nine months, Borders has bought back 8.5 million shares for $199.1 million.
Total consolidated sales rose 0.5% to $837.2 million, and the net loss was $14.1 million compared to a net loss of $1.1 million in the same period a year ago. The company had previously revised estimates of earnings downward, and yesterday's results came in slightly below analysts' estimates.
Still, Borders CEO Greg Josefowicz looked ahead positively, commenting that "with this year's remodel activities behind us, a solid inventory position in our stores and a promotional program in place, we are prepared for the upcoming holiday shopping season."
For the fourth quarter, the company expects earnings to be near or above last year's. At Borders superstores open at least a year, sales should be flat to down in the low single digits. At Waldenbooks Specialty Retail, which includes Borders Express, Borders Outlet, airport stores and seasonal business, comp-store sales will likely decline in the low to high single digits. International sales are expected to rise 6%-12%.
The Divisions
During the quarter, comp-store sales at Borders superstores fell 0.2% while overall sales rose 1.6% to $572.9 million. At the superstores, comp-store book sales rose 3% while comp-store music sales fell 15%. The company remodeled 55 stores during the quarter, finishing the remodeling program, which involved 100 superstores altogether. On a comp-store basis, the remodeled stores outperformed the rest of the superstores by about 2%. The company opened two superstores in the quarter and plans to open nine more in the fourth quarter--for a total of 17 superstore openings during the year.
At Waldenbooks Specialty Retail, comp-store sales fell 5.2% and sales dropped 8.1% to $138.4 million. The company converted 50 Waldenbooks to Borders Express, for a total of 98 conversions during the year to date. Like the remodeled superstores, the converted Borders Express stores outperformed the overall Walden chain by about 2.5% on a comp-store basis.
International sales increased 6.2% to $125.9 million, a less-blistering pace than in some quarters. In the U.K., comp-store sales at Borders superstores dropped 5% and at Books etc. stores fell 10%. In the third quarter, Borders opened three more stores abroad, for a total of 50 stores outside the U.S. In the fourth quarter, Borders will open six superstores, for a total of 15 new stores for the year, which includes two franchise stores in Malaysia.
The company continued its repurchasing program, buying back 2.5 million shares of its common stock for $55.2 million. During the nine months, Borders has bought back 8.5 million shares for $199.1 million.