Earlier this week the Borders bookstore chain announced its earnings for the quarter ending July 31 and the results were weak, as expected. Sales fell 11.5%, to $526.1 million, with a $51.6 million loss.
The deep declines in total sales and comp sales at Borders compared to a sales decline of 2.6% at Barnes & Noble’s retail stores in the quarter with comps down 0.9%. In its official release, Borders had little to say about its financial performance, choosing instead to focus on the various initiatives it says will better position it to perform in the digital marketplace and for the holiday season. The company did not breakout results between its Walden specialty group and superstores. During the quarter, Borders opened one store and closed two, but previous closings in its Walden unit resulted in the company operating 679 stores at the end of the quarter compared to 886 outlets one year ago. In its conference call, Borders executives said the sales decline at its stores was due to a poor performance by its core trade book category, while bargain books and cafe segments rose.
Sales were up at Borders.com, however, mostly from actual book sales.
Today PW’s Jim Milliot interviews Borders CEO Mike Edwards and interim CFO Glen Tomasczewski on changes they hope to make in order to survive. With digital books taking over the future model, the stores are redefining their product mix:
Edwards said that since there is little chance that sales of print books will increase through its bricks-and-mortar stores, the retailer “needs to redeploy the space” that it has dedicated to trade books. While transforming the stores will take time, Tomasczewski said that the Borders that customers walk into this fall will be much different than the store of fall 2009. The retailer’s Area e digital section will be in all stores by the end of October, more bargain books will be available and the layout is being remade to make it easier to find books, Tomasczewski said. The makeover will include adding approximately 900 new signs per story to help customers navigate their way in the stores. And as reported yesterday, Borders is adding more children’s educational toys and games, adult games and puzzles and more stationery. In addition, Borders will add more open space to create a more relaxed atmosphere, Tomasczewski said.
The average Borders shopper is a woman, which defines the chain as “a family- and community-based destination,” said Edwards.
Borders’ teetering state has been a huge drain on the graphic novel industry this year. It was, arguably, Borders’ aggressive investment in manga, led by then buyer Kurt Hassler, that set the stage for a lot of the expansion of the graphic novel market in the last decade. While publishers have already been preparing for a Border-less world, a huge round of book returns from the chain earlier this year sent many comics publishers into maintenance mode for all of 2010. GIN general, graphic novel sales were one of the few bright spots in bookstore sales over the last decade, with steady growth while other categories remained flat. However, the dwindling of the bookstore environment itself is forcing big changes to every publisher.
But, see also.