The Bookseller.com

2nd December 2008

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Borders US hit by soft economy

28.05.08 Philip Jones

Borders US has reported a fall in sales of 1% in its first quarter, according to its latest financial statement, as the "challenging overall consumer environment hampered sales". The only growth area for the US retailer was its international division, which is up for sale.

Total consolidated sales at $784.7m were down 1.0% over a year ago. The first quarter loss from continuing operations was $31.7m compared to $29.1m a year ago. At Borders domestic superstores, comparable store sales for the period decreased by 4.1%. But the book category was relatively stable, declining by just 1.2% on a same-store sales basis. Comparable store sales decreased within the Waldenbooks Specialty Retail segment by 0.8% for the period.

"As was the case with nearly every other retailer, the challenging overall consumer environment hampered sales performance in the first quarter. I am pleased, however, that even within this difficult retail climate, we were able to manage inventory well, begin to aggressively reduce expenses, and end the quarter with better bottom line results than would have been expected in this type of environment," said Borders Group c.e.o. George Jones. "While we have seen an improvement in sales in recent weeks, we will continue to aggressively execute expense reductions and manage our business conservatively, putting us in a much better position for long term success."

Total sales from continuing operations in the international segment were $88m, which is up by 27.2% compared to the same period a year ago. Comparable store sales in the international segment increased by 3.1% in the first quarter as a result of strong performance in Australia stores. The first quarter operating loss for the International segment was $1.3m compared to a first-quarter operating loss of $1m in 2007.

Borders said that the strategic alternatives process for its Australia/New Zealand/Singapore and Paperchase businesses was ongoing. Borders relaunched its website Borders.com at the beginning of the week.

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