Borders Stops Shopping Itself

Borders Group (BGP) late yesterday said it is “no longer contemplating” the sale of the company. (You have to think that’s because they can’t find anyone to buy it.) That news, combined with some fairly ugly results for the fiscal third quarter ended November 1, has the stock reeling. Combined with the recently punk numbers from Barnes & Noble (BKS), the latest results suggest all is not well in the book selling business, providing one more reason to worry about current sales at online book selling king Amazon.com (AMZN).

Borders reported Q3 sales of $682.1 million, well short of the Street consensus of $726.5 million. The company lost $172.2 million in the quarter, including $133.2 million in various non-cash charges. Comp store sales in the quarter were down 12.8%, or 10.6% ex-music. (Ergo, music sales were even worse.) At the company’s Waldenbooks unit, comp store sales were down 7.7%. For the company as a whole, sales were down 10% from a year earlier.

The company said sales at Borders.com in the quarter were just $11.9 million, which the company said was “below management expectations due to the challenging sales environment.” The company it no longer expects the online business to break even this year, contrary to its previous forecasts.

As I noted earlier this week, the company in March had hired bankers to seek a buyer for the company. But they now have abandoned that plan. Borders did say that it retain an option to sell its Paperchase Products unit, a U.K.-based chain of stationary stores, to Pershing Square Capital Management for $65 million. Borders added that is it also “in discussions with Pershing Square regarding an alternative financing transaction.” It gave no details on what that might be.

Borders is down 68 cents, or 40.5%, to $1. Amazon is down 79 cents, or 1.8%, to $41.40.