The updated guidance reflects non-operating charges, including a pre-tax charge of $2.7 million associated with the retirement of Chief Executive Officer Greg Josefowicz (see related news release issued today), and a pre-tax charge of $2.3 million related to the closure of a distribution facility, which was completed earlier than initially planned. As a result, non-operating adjustments, which were originally estimated to be an after-tax charge of $0.00 to $0.02 per share are now expected to be $0.06 to $0.07 per share.
In addition to these non-operating charges, the company is also experiencing second quarter sales trends that are below expectations, which also contributed to management’s decision to revise second quarter earnings per share guidance.
Due to these trends, Borders Group also updated second quarter comparable store sales estimates, which include the cycling against the Harry Potter book from last year.
They knew there was no Harry Potter book this year, so that can hardly be trotted out now as an excuse for the incremental $0.10 earnings shortfall not accounted for by one-time charges.
Shares fell as low as $15.10 in after-hours trading, marking new 3+ year lows for the company.
BGP 3-yr chart:
The company also announced that George Jones, 55, who headed Saks’ department store group before leaving in September, will replace Greg Josefowicz, who said in January he would retire within the next two years. While it looks like Jones will have his work cut out for him, by starting at such a low point, it might not take much to get the shares moving in the right direction.