Borders Group Inc.'s (BGP) fiscal first-quarter loss widened
amid $70.1 million in charges, as revenue fell amid declining
same-store sales.
However, earnings excluding the charges topped Wall Street
expectations, sending shares up 11% to $2.85 in after-hours
trading.
Booksellers have been hurt by the slowdown in consumer spending,
while online competition has cut into sales from brick-and-mortar
bookstores. Borders has cut its inventory and capital expenditures
on its expectation that sales will fall throughout 2009.
For the quarter ended May 2, the second-largest U.S. bookstore
chain reported a loss of $86 million, or $1.44 a share, compared
with a year-earlier loss of $30.1 million, or 53 cents a share.
The latest quarter included $1.17 a share in nonoperating
charges, most of them noncash. Excluding items, the loss narrowed
to 27 cents from 51 cents a share, better than the loss of 50 cents
projected by a Thomson Reuters analyst poll.
Revenue dropped 12% to $641.5 million.
Consolidated gross margin on an operating basis fell to 22.2%
from 23.3%.
Same-store sales at U.S. Borders superstores decreased 14%,
while the figure fell 5.5% at the mall-based Waldenbooks segment,
which the company has been shrinking.
Sales in the international segment dropped 15%, but would have
been up 9.5% excluding the effects of the stronger dollar.
Last week, larger rival Barnes & Noble Inc. (BKS) posted a
wider fiscal first-quarter loss amid weak store traffic, but the
bookseller boosted its fiscal-year outlook, crediting its
cost-cutting efforts.
The company's stock has lost two-thirds of its value from
September, but has rebounded from its all-time low of 34 cents in
December. Last month, Borders said it wouldn't seek a reverse stock
split, which it had been considering to maintain its listing on the
New York Stock Exchange, after the stock rose above $1 for the
first time in four months.
-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com