Borders Group swung to a Q4 (ended Feb. 3) $73.6 million loss (-$1.25/share), hurt by charges related to its Waldenbooks store closings. In addition, it presented a long-term strategic plan that calls for re-embracing the online market (ending its alliance with Amazon), among other notable details. Excluding certain items Borders earned $94.8m, or $1.61/share, coming up short of analysts' average estimate of $1.62 (Reuters) - $1.63 (Thomson). In the same period in the year prior, Borders earned $119.1m, or $1.78/share. Sales rose 2.9% to $1.52b, beating analysts' average estimate of $1.47 - $1.48b. Borders said it expects to return to EPS growth in 2008, and said it won't discuss sales and earnings estimates with analysts. Details of its strategic plan include: (1) Refocusing efforts and investments on domestic Borders superstores; (2) exploring strategic alternatives for a majority of its international stores; (3) pursuing a franchise model for future int'l expansion; (4) continuing to reduce Waldenbooks store count from 564 at year-end '06 to approx. 300 by '08; (5) consolidating web properties into new Borders.com e-commerce site in early '08; (6) planning to publish exclusive and proprietary books; and (7) The Wall Street Journal mentions it will likely reduce its CD inventory and quoted the firm's new CEO who said, "We are looking to get into the downloading business." Borders' shares gained 1.28% to $21.43 yesterday -- it has traded between $16.20 - $25.49 over the past year.
Sources: Press release [I, II], Associated Press, Bloomberg, The Wall Street Journal
Commentary: Will Borders and Barnes and Noble Become Book Buddies? • 20 Stocks Owned By Top Activist Funds • Activist Investor Ackman Turns Bullish on Borders -- Shares Soar [Nov. '06]
Stocks/ETFs to watch: Borders Group (BGP). Competitors: Barnes & Noble (NYSE:BKS), Amazon (NASDAQ:AMZN), Books-A-Million (NASDAQ:BAMM)
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