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Borders, BAM Plan Many New Superstores
-- 5/11/98
The Borders Group and Books-A-Million both plan to move ahead with the opening of new superstores in fiscal 1999, according to public documents.
Borders Group expects to spend $160 million in the current fiscal year on capital expenditures, the bookstore chain said in a filing with the Securities and Exchange Commission. The funds will go toward opening 43 superstores, including three international stores, as well as eight new Waldenbooks outlets. During the year, the company will continue its policy of opening a number of larger mall stores that range in size from 5000 to 8000 sq. ft. and carry between 30,000 and 40,000 titles, compared to the traditional Walden outlets that average 3300 sq. ft. and have 15,000 to 25,000 books. Of the 904 Walden outlets, 101 are the larger-format stores.
Also during the year, Borders said it will open its new state-of-the-art fulfillment center in Nashville, Tenn. The facility can stock in excess of 700,000 book, video and music titles. Borders said the new center will help support orders placed through its planned Web site.The long-awaited site had been expected to launch last week, but at press time had still not appeared.
The company also put the purchase price that it paid last year for its Books etc. acquisition at $71 million (News, Oct. 6, 1997).
Meanwhile, in a show of strong support in the future of the company, Borders's four top executives-Robert DiRomualdo, George Mrkonic, Bruce Quinnell and Richard Flanagan-all decided to take stock options in lieu of cash payments for 100% of their salary and bonuses for fiscal 1998. DiRomualdo and Mrkonic were both scheduled to make slightly over $1 million last year, while Quinnell's salary and bonus totaled $800,000. Flanagan's cash compensation would have been $605,000.
BAM Budget at $22 Million
For its part, Books-A-Million said the company has budgeted $22.1 million in capital expenditures for the coming year, compared to $14.4 million in fiscal 1998. The funds will be used to open 20 new superstores as well as to help BAM improve its inventory management system. During fiscal 1998, BAM opened 16 superstores, three combination stores and two traditional stores, while closing three combination and four traditional outlets. BAM also reported that superstores accounted for 87.6% of retail sales, or some $281 million.
In its annual report, BAM said increased sales in its core book business were led by "basic" titles, computer and children's books as well as a number of series such as the Chicken Soup for the Soul titles. BAM said it had "excellent results" from its magazine and gift departments, with BAM's proprietary and private label gift items doing particularly well. The café division also had strong results.
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