Reporting results for their first quarter ending May 1, in a still grim atmosphere for physical stores of all kinds, Borders sales fell 15.4 percent overall at $542 million. The loss from continuing operations of $64.5 million was better than a year ago, but the operating loss of $33.5 million was worse.
Sales at the US stores fell further, down 16.1 percnent to $520–but same-store sales were down by only 11.4 percent company to a year ago. The company says that factoring out multimedia, which they theoretically pulled down dramatically years ago, comp store sales declined 6.8 percent, indicating less weakness in book sales. Gross margins also fell, from 22.4 percent to 19.9 percent.
With the closure of 214 stores over the past four quarters (primarily mall-based stores), inventory on their books also dropped 6.4 percent, now at $836 million. Even with the inventory reduction, total debt climbed again, “primarily due to our recently completed financing arrangements,” now at $294.7 million. And the reduction did not affect their trade payables, either, which stand at $348.5 million, about the same as a year ago.
Interim ceo Mike Edwards says in the release: “Our top line remained challenged during the first quarter, yet we were able to soften the impact on our bottom line through continued cost controls, The $25.0 million equity investment by Bennett S. LeBow — coupled with our recently announced debt financing — strengthens our balance sheet and enables us to continue to aggressively execute a number of key financial and strategic initiatives that will transform the Borders brand. These include improving the store network to increase profitability and productivity and maximizing the digital opportunity, including growing Borders.com.”