With all three of its operating segments turning in gains in comparable store sales, Borders Group reported that total revenue rose 5.3% in the third quarter ended November 3, to $805.2 million. The increase was slightly below the 5.7% gain reported earlier by Barnes & Noble.
Total sales at the company’s superstores rose 5.6%, to $615.8 million with comp store sales ahead 1.1%. Same store sales of books were up 3.1%, helping to offset a 13.1% decline in music same store sales. The café and Paperchase units also posted solid comp gains. The company attributed the overall improvement at the superstores to increased customer traffic and, on a comp store basis, a 2.8% increase in the number of transactions. Borders CEO George Jones said that while the company is doing a much better job at getting people into the stores higher discounts offered to Borders Reward members has kept the size of the ticket from increasing. Jones was confident Borders will be able to ease back on discount offers in the future.
Sales in the Waldenbooks Specialty Retail segment fell 11.7% in the quarter, to $109.7 million. A 3.6% improvement in same store sales was offset by the reduction of 131 Walden outlets compared to a year ago. Sales growth was led by a 1.8% increase in the number of transactions and a 1.8% increase in transaction size. Borders will close another 50 Walden outlets in the fourth quarter, but Jones said that with a number of stores that were scheduled to be closed showing significant improvement the number of closings will be fewer than originally planned. CFO Ed Wilhelm said the final number of Walden outlets is likely to be at the high side of the initial estimate that put the final count between 300 to 400 outlets.
International sales rose 38.4% in the period, to $79.7 million. Sales exclude results from its U.K. and Ireland unit, which was sold in September. A deal to sell its Australian and New Zealand operations could come before the end of the fiscal year.
Despite improvement in the top line, the net loss in the quarter increased to $161.1 million compared to a loss of $39.1 million in last year’s third quarter. The loss includes a charge of $116.5 million to reflect a loss on the sale of the U.K. operations.
Although Borders is not providing a forecast for the fourth quarter, Jones said he is confident the company will deliver improved same-store results in the holiday season and higher profitability than a year ago.
