Borders reports a smaller first-quarter loss even as its sales fall 16 percent

Thursday, May 27, 2010

Book seller Borders’ fiscal 1st-qtr loss narrows

ANN ARBOR, Mich. — Borders Group Inc.’s fiscal first-quarter loss narrowed as its cost-cutting offset a 16 percent drop in revenue, the second-largest traditional U.S. book seller said Thursday.

Its shares rose 3 percent in premarket trading.

The company, based in Ann Arbor, Mich., lost $64.1 million, or $1.07 per share, for the period that ended May 1, compared with a loss of $86 million, or $1.44 per share, a year earlier.

Revenue fell 16 percent to $547.2 million from $650.2 million.

Borders has been struggling with weak sales as it faces tough competition from discount stores and online retailers.

Last week it received $25 million from financier Bennett LeBow, who will become the book seller’s chairman and biggest shareholder with a 15.5 percent stake.

Mike Edwards, the company’s interim president and chief executive officer, said in a statement Thursday that LeBow’s investment allows the company to execute its strategic plan, including returning to profitability and expanding its Web site.

As interest in electronic books rises, Borders plans to start selling a Borders-branded Kobo e-reader and other e-reading devices in a section of its stores to be called “Area E,” beginning in August.

Borders has closed 214 bookstores since last year’s first quarter, and its inventory fell 6 percent to $836.2 million.

Revenue in the book seller’s international segment, which includes Paperchase stores and its franchise business, rose nearly 4 percent to $22.4 million.

Domestic sales fell 16 percent to $520 million.

Revenue in stores open at last a year fell 11.4 percent. That’s a key measure of a retailer’s performance because it excludes the impacts of expansion and stores closing.

Borders’ shares rose 6 cents to $2.35 in before the markets opened Thursday.

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