Borders Second Quarter Slumps, Web Sales Soar

ANN Arbor, MICH/AUTHORLINK NEWS/September 1, 2010--Borders Group today reported an 11.5% decline in sales in the second quarter ending July 31, 2010, compared to a year ago. Comparable store sales declined 6.8% over the previous year, but sales on its web site, Borders.com, soared 56.2% for the period to $15.5 million.

The company generated a loss from continuing operations in the second quarter of $51.6 million for the same period a year ago.

"While we continue to succeed in strengthening our financial structure, we are highly focused on driving profitable sales and increasing market share," said Mike Edwards, CEO of Borders. "Based on extensive consumer research, we are doing a number of things to excite our customers going into the critical holiday shopping season, including launching our new Borders Rewards program, which includes the new paid Borders Rewards Plus. Recognizing that online and digital will be a significant part of our business moving forward, we are focused on increasing our share of the eBook market by growing our digital offerings to position Borders as the preferred destination for digital reading. Yet as we grow our online and digital business, we cannot underestimate the importance of our brick and mortar presence. This will be top of mind as we work on improving the in-store experience by shifting our product mix to include additional non-book products that are both compelling and relevant, and providing an escape for our customers though an inspirational in-store environment and consistent customer service."

Expanding Digital, Online and Social Media

The company is leveraging its strong brand recognition among book lovers -- particularly its millions of Rewards members -- to position Borders as the preferred destination for both digital content and devices. Borders' recently launched eBook store has been well received by customers. The company is now offering six e-reading devices including the Kobo eReader, Aluratek "Libre" eBook Reader Pro, Velocity Micro Cruz(TM) Reader and Velocity Micro Cruz(TM) Tablet as well as two Sony devices. Sales of the Kobo as well as pre-orders for the Aluratek and Velocity Micro devices have exceeded expectations. The company expects to announce additional devices in the coming weeks.

The company announced this week that it had lowered the price of the Kobo unit to $129.99 and the Libre Pro to $99.99, which will make it among the most aggressively priced devices in the industry. Borders will complete its digital initiative with the roll out of its Area-e digital shops, which will conclude in early October. The shops will provide let customers experience a variety of different eReaders, guided by knowledgeable staff, who can demonstrate the devices and answer questions.

"Borders is now an industry authority on digital content and devices," said Edwards. "We offer a large assortment of eReaders at price points that fit with most budgets and we are exploring adding new devices and brands in the fourth quarter as part of our device neutral strategy. As our newly launched eBook store and mobile apps gain traction, we believe we hold a strong growth position within a digital ecosphere that is rapidly evolving and expanding."