Borders released its Q1 earnings report after the close on Monday, reporting that a “challenging overall consumer environment” led to sales declines.  Comparable store sales for Borders superstores were down 4.1%; Waldenbooks same store sales were down .8%.  Without music, Borders sales dropped 1.7%.


The company lost $31.7 million, down from a $35.9 million loss in the year ago period.  The $.53 per share loss was worse than analyst expectations of $.47 per share, as reported by Thomson Financial.


Sales also slid at Borders’ larger competitor, Barnes & Noble, in the first quarter, although at a slower rate (see “Sales in Decline at B&N”).   


Borders did throw off $133 million in cash in Q1 by reducing inventory, allowing it to reduce debt by roughly the same amount.  This reduces the pressure on the company caused by its financing problems.  Since it announced that it had a potential credit crunch, Barnes & Noble has assembled an acquisition team to look at the company (see “B&N Looking at Borders”). 


Borders launched its new e-commerce site on Tuesday, selling books online on its own behalf for the first time since partnering with Amazon for online sales seven years ago.  The company had been expected to move away from Amazon for some time (see “Borders Examines Relationship with Amazon”). 


Borders believes its new Website will break even this year, and improve from there.  It plans to leverage its Rewards members as one way to drive Website sales.