Borders Group Inc., the second-largest U.S. bookstore retailer by sales, on Tuesday evening reported a plunge in earnings for the fiscal fourth quarter but reduced debt by $218 million at year-end and sharply cut inventory levels.
The retailer has been slashing payroll and paring costs as the book business has slumped amid the recession. It has announced three rounds of layoffs since Jan. 1, totaling nearly 900 employees.
In the quarter ended Jan. 31, Borders earned $29.6 million, or 49 cents per share, down from $64.7 million, or $1.10 per share, a year earlier. Sales fell 13% to $1.09 billion from $1.26 billion. Comparable-store sales, a key economic indicator, declined 15.3% at Borders superstores and 4.7% at Waldenbooks. For the fiscal year, same-store sales at the superstores fell 10.8%, and 5.1% at the mall stores.
"We have taken a lot of expense out of the system, and reduced debt and inventory," said Ron Marshall, chief executive, in an interview. "Our major vendors have been very helpful. But there are several things we need do from a marketing and merchandising perspective."
Mr. Marshall said the chain intends to focus more of its energies on promoting specific titles, and cited two recent books that he said Borders has helped turn into national best-sellers, Jamie Ford's novel "Hotel on the Corner of Bitter and Sweet" and Kelly Corrigan's memoir, "The Middle Place."
As for revenue, Mr. Marshall said that he expects 2009 to continue to be challenging but that he thinks the economy could strengthen next year. "We were very conservative in our sales forecasts," he said. "We want to be sure that in a difficult environment we get to the other side." He noted that the retailer will trim another $70 million in expenses in the current fiscal year.
Late Monday, the retailer, based in Ann Arbor, Mich., disclosed that it had extended for another year its $42.5 million loan agreement with Pershing Square Capital Management LP, its largest shareholder. It also agreed to let expire a put option that could have forced Pershing Square to buy its U.K.-based Paperchase stationery business for $65 million. Mr. Marshall said he considered Paperchase to be a "core asset" and that he didn't want to sell it.
No comments:
Post a Comment