Borders Posts Another Loss, Worse Than Expected, Shares Down

Borders Group said its Q1 net loss increased to $35.9 million, or $0.61/share (vs. $0.31/share last Q1), on a 2% rise in sales to $885.8m. Its operating loss of $0.51/share was more than analysts' average forecast of -$0.31. Analysts expected sales of $876m. More weakness is expected in Q2, but analysts believe Borders will report a full year profit. Shares of Borders lost 0.4% to $23.32 during normal trading Tuesday and last traded down 3.3% to $22.55 in after-hours activity on thin volume of 40,000. CEO George Jones said, "The current sales environment was more challenging than we anticipated." He previously called '07 a year of transition and said the Company is targeting a return to EPS growth from '08. Domestic superstore sales rose 1.4% to $615m, but same-store-sales fell 1.9%, and an operating loss of $22m was reported after a $1.5m profit last Q1. Rival Barnes & Noble also posted a quarterly loss, but nearly broke even, while beating analysts' average estimate.

Sources: Press release, Bloomberg, MarketWatch
Commentary: Borders Cancels Debt Sale on Shareholder Objections • Borders Reports Q4 Loss, Announces Long-term Strategic Plan • Will Borders and Barnes and Noble Become Book Buddies?
Stocks/ETFs to watch: Borders Group (BGP). Competitors: Barnes & Noble (BKS), Amazon (AMZN), Books-A-Million (BAMM)

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