Borders Group chairman Greg Josefowicz's suggestion made earlier this year that the company plans to scale back its new superstore opening program in 2004 (News, Mar. 24) was reiterated in the company's year-end filing with the Securities and Exchange Commission. In the filing, Borders said that it expects to open 35 to 40 superstores this year "and a reduced number in 2004." International plans call for the opening of six to eight stores over the next several years, primarily in the U.K. and Australia.
New store openings supplied all of Borders's top-line growth in its domestic operations in 2002. Same-store sales at its superstores fell 1.2%, or $35.7 million, while new stores generated sales of $129.5 million. Borders opened 41 superstores last year and total sales rose 3.8%, to $2.32 billion. Borders said the decline in comparable-store sales was due mainly to a drop in music sales, although same-store sales were also down in the book category. Same-store sales were up in the movie and gifts and stationery categories.
The 5.5% decline in sales at Waldenbooks, to $852.2 million, was attributed to a 3.2% decrease in comparable-store sales ($20.7 million) and a loss of $29.2 million associated with the closure of 53 stores in the year. The decline in same-store sales was attributed to decreased mall traffic and the impact of superstore openings. Sales at Walden's calendar kiosk business rose 14% in the year, and its Preferred Reader Program generated revenue of $25 million, flat with 2001.
The 25.1% sales increase in Borders's international division, to $314.9 million, was due to a combination of eight new superstore openings and an unspecified increase in comp-store sales. Loss from international operations was $12.3 million, up from $7.5 million in 2001.
In a legal update, Borders reported in the filing that it has entered into non-binding mediation in a lawsuit filed in 1996 by two California employees who claim they are owed unpaid overtime. The lawsuit was certified as a class action last year (News, Sept. 23), and Borders's request for an immediate appeal of the decision was denied.