With Borders Group CEO Ron Marshall, saying the “big changes for the year are behind us now,” the chain reported that total revenue fell 17.7% in the second quarter to, $624.7 million. Same store sales at superstores tumbled 17.9% leading to a 17.4% decline in revenue in the segment, to $513.6 million. Excluding multimedia, where music comps were down 51% and DVD off 48%, comp sales were down 13.0%. Marshall called the second quarter a “transitional one” during which Borders significantly downsized its multimedia offerings and expanding a number of areas, most notably children’s and teen as well as games and toys. The children's section has been expanded by 20% and the number of toy and game SKUs almost doubled. Marshall said the changes, which disrupted sales in some areas, have “better positioned” the stores to drive sales in the back half of the year. Sales in the Walden Specialty segment fell 23.1%, to $74.5 million, due to a combination of fewer stores--370 compared to 468 one year ago--and a comp decline of 10.8%. Closing of Walden stores reduced inventory by $41 million. The company again acknowledges that it reduced inventoy at its superstores by too much and is continuing to replenish its stock with Marshall expecting the stores to be at appropriate levels by mid-September.
Due in part to more one-time charges, the net loss from continuing operations was $45.6 million in the quarter compared to a loss of $11.3 million in the second quarter of 2008; charges totaled $32.9 million. The company did cut its debt by $179.3 million from a year ago, to $242.5 million, and reduced its multimedia inventory by $57.3 million. Multimedia, which at one point accounted for 23% of sales, now represents 8% of revenue, a figure that Marshall said is appropriate. Borders also limited capital expenditures to $2 million in the period compared to $27.1 million a year ago. In addition to closing over 100 Walden outlets in the last year (including six in the quarter), Borders shut two superstores in the period.
For the first six months of 2009, revenue fell 17.7%, to $1.28 billion and the loss from continuing operations was $131.6 million, up from $41.4 million.
