Borders to explore strategic alternatives, Web site launch on schedule
Borders cuts corporate staff by 20%
Borders Group Inc. has said it will explore strategic alternatives, including a possible sale of certain divisions or of the entire company.
The company is “taking stock of where it is and where it wants to go,” said Anne Roman, corporate affairs director at Borders. She added that, as Borders considers some new initiatives, such as its recently opened concept stores and the upcoming launch of a stand-alone e-commerce site, it “wants to make sure there is financial flexibility for those things going forward.”
After partnering with Amazon.com for an e-commerce site for several years, Borders has said it will launch an independent site by the end of its fiscal first quarter, which ends on May 3. The recent announcement regarding exploring strategic alternatives should not impact this time frame, Roman said.
The announcement is really about exploring a wide range of alternatives, Roman insisted, including the possible sale of Borders's UK-based Paperchase division. Paperchase is a gift and stationery business with 100 locations in the UK and 300 shops within Borders stores.
A potential deal might also include the sale of Borders international operations, Roman said.
As part of a $42.5 million financing commitment from Borders stockholder Pershing Square that was also announced, the latter has agreed to a backstop purchase that will give Borders the right to require Pershing Square to purchase its Paperchase Australia, New Zealand and Singapore subsidiaries as well as its approximately 17% interest in Borders UK for $125 million.
Borders also reported financial results, indicating that consolidated sales totaled $1.3 billion in the fourth quarter. Excluding the impact of the extra week during fiscal 2006, this represents a 2.8% increase over the same period a year ago.
Sales at domestic Borders superstores during the fourth quarter totaled $957.8 million. Excluding the impact of the extra week during fiscal 2006, this represents an increase of 5.1% over the prior year. On a comparable store basis, transactions increased by 1% for the fourth quarter and same-store sales in the segment increased for the period by 2.1%.
For the full year, Borders Group's consolidated sales totaled $3.8 billion. Excluding the impact of the extra week during fiscal 2006, this represents a 4.2% increase over the prior year.
Sales at Borders domestic superstores for the full year totaled $2.8 billion. Excluding the impact of the extra week during fiscal 2006, this represents an increase of 5.3% over the prior year. Same-store sales for 2007 were up 1.5% in the segment.
Sales within the Waldenbooks specialty retail segment were down 17% in the fourth quarter for a total of $228.3 million. Same-store sales increased 1.2% during the same period.
For the full year, sales in the segment totaled $562.8 million, which when adjusted for the extra week in 2006, represents a decrease of 14.1%. The company closed 75 underperforming Waldenbooks stores in 2007 and will continue to aggressively close Waldenbooks locations that are not achieving targeted returns. Same-store sales increased 2.2% for the full year.
International sales totaled $138.5 million in the fourth quarter, up 34.6% compared to the same period a year ago. For the full year, international sales totaled $364.8 million, up 37.2%.