Friday, August 31, 2007

Borders Chain Still Losing Money

It's not nearly as easy as it seems for the large bookstore chains to make money. Barnes & Noble has been producing a smaller profit than its shareholders would like to see and Borders continues to disappoint its own by reporting another loss in its latest quarterly results.
Harry Potter helped, but even without the boy wizard, sales grew at Borders Group Inc. bookstores worldwide in the second quarter, reversing a year-long trend of declines at the company's U.S. stores.

It still wasn't enough to swing the Ann Arbor-based bookseller to a profit.

Hampered by a charge relating to settlement of a California lawsuit and costs from its new strategic plan, Borders lost $25.1 million, or 43 cents a share, in the quarter ended Aug. 4. Analysts expected a 34-cent loss.

Without the one-time expenses, Borders would have lost $15.3 million. Its 2006 second quarter loss was $18.4 million.

"We fully realize we have a lot of hard work yet to do,'' Borders chief executive George Jones said Wednesday during a conference call with investors and analysts.
...
Borders now has 20 million people signed up for its Borders Rewards customer loyalty program and continues to sign new subscribers up at a rate of 150,000 per week since April, when major changes to the program were announced.

"Results were far from impressive, but for the first time in several quarters, (Borders) is not redefining the low end of its earnings potential with a quarterly report,'' Goldman Sachs analysts advised investors in a note Wednesday. "Sales results are encouraging, and losses are roughly in line with expectations.''
News like this helps me to understand why Barnes & Noble has decided to stock the O.J. Simpson garbage on its shelves despite announcing earlier that it would not do so. Times are not all that great for the two big chains.

6 comments:

  1. With one in four adults not reading a single book in a year.....it's all starting to make tragic sense.

    ReplyDelete
  2. I think I've been singlehandedly keeping local Borders store in business. I've vowed not to buy any more books until I've read everything on my bookshelves, so hopefully they won't go bankrupt in my absence!

    ReplyDelete
  3. For those of us in the book business this comes as no surprise. We have Waldenbooks here in Columbia, SC, instead of Borders, and the home office closed a bunch of Waldenbooks stores last year across the country, including one that used to host book signings for me. They left the big Waldenbooks here in my neighborhood, because it is in a yuppie mall and does well. One of my best friends is the manager, and sales are good for them so far. But their inventory is stripped to the bare bones and features only what sells best for them. Which is the way it has to be when you want to keep afloat in this business.

    I know I heard last year that sales were so bad for Borders/Waldenbooks that even the new 2007 Harry Potter book wouldn't help. In fact they didn't think they would make much money from it with all the discounting. Plus, every store that could would be selling the book at a discounted price, including grocery stores and drugstores. And that's exactly what happened.

    Bookstores are being battered on all sides by changes in the book market as well. I don't think it is entirely because people are said to be reading less (I still don't quite believe that one). But I do know bookstores are taking a serious hit from sales of ebooks and the different electronic readers, as we have discussed on this blog before.

    So time will tell. The times they are a changing! But I have faith it will all work out well in the end for bookstores though. They are some of my favorite places to shop and hang out!

    ReplyDelete
  4. Carrie, isn't that an amazing statistic? I still find it hard to believe that a person can go for years without reading a book...or dozens of them. I find it sad.

    ReplyDelete
  5. Susan, it's hard to believe that they could be bleeding that kind of money, isn't it? Their continuing losses keep the rumor of a merger with Barnes & Noble alive. I hope that never happens.

    ReplyDelete
  6. Laura, I have to believe that it will all shake out eventually and that any voids left will be filled with new bookstores. As long as demand is there, someone will step in and provide the product.

    If it's not Borders and Barnes & Noble in the version of those stores that we see today, others will work out a new business plan that succeeds. Bookstores will just not go away.

    But Amazon and e-books are definitely changing the face of book retailing and it will be interesting, and fun, to see what happens next.

    Honestly, it's hard to feel too sorry for the two big bookstore chains since they put so many other stores and smaller chains out of business while growing their own. I take advantage of the discounts they offer but now they are starting to get bitten by other retailers doing the same...poetic justice?

    ReplyDelete