Chain has lost $15 million developing Borders.com
The Borders Group reported that net income for the fiscal year ended January 24, 1999, increased 14.8% to $92.1 million. The jump in earnings included a $10.5-million loss recorded by Borders.com in the year; the company's store operations had a 19% increase in profits to $102.6 million. Earlier this year, Borders reported total sales of $2.59 billion (News, Feb. 1).
The fastest growing segment at the company was the "other" category, which includes Borders' Books Etc. U.K. subsidiary (acquired in October 1997) and outlet stores. Borders' own international stores are included in the sales figures for Borders. Sales in the Borders superstore division rose 23.7% to $1.56 billion and now account for 60.3% of total revenues, compared to 55.8% a year ago. Sales growth was driven by the opening of 47 superstores as well as a 3.5% improvement in comparable store sales. Borders had 250 superstores at the end of fiscal 1999.
The 2.7% decline in sales at Waldenbooks reflects a 1.0% drop in same store sales as well as a reduction in stores from 923 outlets to 900.
According to Borders CEO Phil Pfeffer, initiatives for the current year include plans to drive Borders' online efforts by growing Borders.com and integrating Web-based technologies into its stores. Through Borders.com and Bordersstores.com, the company has a network of more than 200 Web sites that it feels can be integrated with its physical stores to improve consumers' shopping experience.
The company also hopes to better leverage its new Borders Net Fulfillment Center for immediate delivery and services, for both Borders.com and special orders from Borders' Net Express service. The chain expects to extend the service to Walden some time this year.
Pfeffer reiterated earlier comments that the company will improve the conditions of its stores through such measures as installing new directional signage and restructuring its internal and external marketing activities.