Borders Group reported solid sales gains for the second quarter ended August 4, but a number of one-time items led to a higher loss than a year ago. Total revenue rose 10.4%, to $945.1 million, and the net loss increased to $25.1 million from $18.4 million. Benefiting from sales of Harry Potter and the Deathly Hallows, comp sales at Borders superstores rose 4.6%, with total sales up 9.7%, to $658.6 million. Excluding Hallows, same-store sales at the superstores were up 0.4% in the quarter, the first time in a year same-store sales had improved. In addition to Hallows, sales were up across the children’s segment, while sales in the cafe and gift and stationery segments also rose. Music sales dropped again.
Revenue at the Waldenbooks specialty retail segment increased 7.7%, to $116.7 million, with comp sales ahead 6.2%. Without Hallows, same-store sales were flat, the first time in nearly two years that Walden comps were not down. CEO George Jones attributed the sales improvement in the segment to efforts to get more people into mall stores and to a better product mix. The company still closed 21 outlets in the quarter as part of its strategy to shut underperforming stores.
In the international segment, sales rose 31.2% (20.7%, excluding currency translations), to $169.8 million. With Hallows, comp sales were up 8.2%, and ahead 5.6% without the bestseller. The company said it is moving ahead with plans to sell most of the stores in the international group.
Among the charges taken in the quarter were a $3.5-million hit to cover a payout in an earlier agreement reached in California regarding overtime pay for employees. Other charges were related to executive severance costs, store closures and relocation costs, and professional fees tied to the pending sale of stores in its international division.
Total revenue for the first six months of the year rose 6.2%, to $1.84 billion, and the loss deepened to $61 million from $38.6 million.