Sales at the Borders Group continued to decline in the second quarter of 2010 falling from $617 million in 2009 to $526 million, an 11.5% drop. Given the fact that 2009 was such a bad year, the bookseller’s Q2 performance looks even worse when compared with the same period in 2008 when the chain’s sales totaled $945 million (see “Borders Cuts Losses”).
Operating losses increased from $45.1 million in the same quarter in 2009 (see “Sales Declines Accelerate at Borders”) to $51.6 million or nearly 74 cents per share (Borders’ shares are currently selling for just over a dollar).
The decline in same store sales eased from the horrendous 17.9% in Q2 2009 to 6.8% in the second quarter of 2010. The lone bright spot was Borders.com sales, which increased 56.2% versus last year and totaled $15.5 million.
The company’s overall debt increased by 2.7% to $262 million, while inventory declined from $868 million a year ago to $798 million. The company’s trade account payable number was down to $348.5 million from $401 at this time last year.
Going forward Borders is hoping to curry customer loyalty with its “Borders Rewards” program and is trying to position itself as “the preferred destination for both digital content and devices” by cutting the prices of an array of e-readers. Borders also wants to continue to expand its Children’s sections, which publishers of youth-oriented graphic novels have told ICv2 have had a positive impact on sales (see “Borders Creating In-Store Teen Boutiques”). Borders is touting a recent agreement with Build-A-Bear Workshop to include Build-A-Bear craft kits and other items in its Children’s areas.
According to CEO Mike Edwards, the agreement with Build-A-Bear is part of Borders strategy “to transform our retail model, in part through high-impact strategic partnerships, like Build-A-Bear Workshop, that enable us to offer a compelling mix of lifestyle focused products… a rich and relevant selection of product – both book and non-book.” Translation: “fewer books and more tchotchkes.”
