Music Slows Borders Sales

by Jim Milliot, PW Daily -- Publishers Weekly, 11/22/2006

Total revenue at Borders Group rose 1.7% in the third quarter ended October 28, to $851.6 million, and the company reported a net loss of $39.1 million in the quarter, compared to a loss of $14.1 million in last year's third period.

Although sales at its domestic superstores rose 1.8% in the period, to $583.2 million, comparable-store sales in those outlets were down 0.7%. CFO Ed Wilhelm explained that while comparable-store sales of books rose 1%, poor sales in the music category dragged down the overall comparision. And unlike Barnes & Noble, where comparable-store sales at superstores rose 2%, Borders did not see an improvement in bestseller sales in the quarter. "Bestseller sales were still down a little, although they showed some improvement in late October," Wilhelm said. Backlist titles drove the improvement in comp sales.

Sales in the Waldenbook specialty retail segment dropped 10.5%, to $123.8 million, as same-store sales fell 5% and the company closed seven locations. Wilhelm said that going forward, the company is likely to increase the pace at which it closes mall-based Walden outlets. The retailer has been closing 40 to 50 mall stores per year and had 652 outlets at the end of the third period.

International sales rose 14.9%, but sames-store sales were off 0.3%, as continued weakness in the U.K. offset gains in Asia Pacific stores.

For the fourth quarter, Borders predicted that same-store sales in its superstores will range from flat to an increase in the low single digits--the same range given by B&N. Wilhelm noted that as bestseller sales improved late last month, store traffic picked up; he is hoping that trend will continue into the fourth quarter as more big books hit shelves.

This article originally appeared in the November 22, 2006 issue of PW Daily. For more information about PW Daily, including a sample and subscription information, click here »

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