At Borders Group, consolidated sales in the fourth quarter ended January 31 fell 12.9% to $1.1 billion. During the full year, sales fell 8.8% to $3.2 billion. Net income in the quarter fell 45.7% to $29.6 million while the net loss for the year grew 18.6% to $186.7 million.
Borders emphasized that it had cut debt, inventory and costs and would continue to do so this year. (Details below.) Wall Street appeared to like the news: yesterday on nearly double the usual trading volume, Borders shares rose 46% to close at 92 cents a share, their highest level since last November.
In the fourth quarter, sales at Borders superstores open at least a year fell 15.3% and fell 4.7% at the Waldenbooks Specialty Retail stores. Comp-store book sales at Borders were down 11.7% and nonbook products fell 21.1% in the quarter. For the full year, Borders same-store sales fell 10.8% and Waldenbooks fell 5.1%. For the full year, comp-store book sales at Borders fell 8.2% while nonbooks fell 16.1%.
Sales at Borders.com, which started operating in-house in May, were $26.4 million in the quarter and $45.7 million for the year.
During the fourth quarter, Borders opened one superstore and closed five. During the year, the company closed 84 Waldenbook division stores and 112 during the year, leaving 386 stores.
International sales, consisting mainly of Paperchase, were $43.2 million in the quarter and $136.7 million for the year.
The company highlighted that during the year it had reduced debt by $217.8 million to $336.2 million. During the year it also reduced its inventory investment to $915.2 million compared to $1.24 billion at the end of FY 2007, a 26.3% reduction. Borders plans to cut costs another $120 million this year.
In a statement, Borders CEO Ron Marshall said, "Our top priority is getting our financial house in order by continuing to reduce expenses, pay down debt and improve cash flow." The company is focused, he continued, "on driving sales through improved execution and by re-engaging with our customers. Borders is a strong brand with millions of loyal customers."
Marshall was not optimistic about the near future, saying, "We expect sales trends to continue to be negative throughout 2009 and will manage the business accordingly. We have planned only minimal capital expenditures and will continue to hold the line on our deeply reduced cost structure while remaining engaged with our vendors and others as we work to get the company on more firm financial footing. In addition, our efforts to drive the top line and improve margins will continue to intensify as we move forward."
According to the Wall Street Journal, "Marshall said that the chain intends to focus more of its energies on promoting specific titles, and cited two recent books that he said Borders has helped turn into national bestsellers, Jamie Ford's novel Hotel on the Corner of Bitter and Sweet and Kelly Corrigan's memoir, The Middle Place."
The AP wrote that "executives said Borders will continue to focus on improving its cash flow and profitability while trying to reassert itself as the bookseller for 'serious readers.' It also will beef up some underdeveloped product categories such as cooking and children's books and move away from unprofitable categories like music."