Borders "Faces" Higher Sales

It is amazing how the smallest little thing can make such a huge difference in retail. Borders CEO George Jones gave an interview March 5th and spoke about his companies new concept.

Despite the fact that the store has 20% fewer books in its inventory, sales at the location are up by double digits. The reason? Rather than having books aligned on the shelves with the spine facing out, Borders is stocking the shelves of the new concept store with the face of the book facing out. A minor change making a huge difference.

Now, the inventory issue is not an alarming one. The majority of the titles affected by the cutback are currently selling less than one book per month at each location. Customers will still be able to get these titles from in-store kiosks that will deliver the book to the store for either pick-up or delivery. This is much like Wal-Mart's current "site to store" program that has been so successful.

Borders reports on the 19th and the commentary on the new concept will be much listened to...

Read the full article here.

Disclosure: No position.

Comments

[nyka:]

So how have these "creative" moves impacted the stock price, now at a multi-year low and diminishing steadily?

2008 Mar 09 02:05 PM

[todd su:]

nyka,

the store has been open 3 weeks... a bit early to tell.. no?

2008 Mar 09 07:04 PM

[Tony Kent:]

BGP is an extremely cheap stock. While the new concept and restructuring will be in fits and starts the stock at $7.50 is compelling. Assuming the company can get operating margins into the 4.5-5% range by 2010 BGP has earnings power of $1.83-2.00. At 10X EPS which was the companies low EPS in the last 10 years the stock can trade between 18-20. This is valuation is backed up by the $20 price target being equal to 0.03X sales in 2010 which prior to this massive selloff was the p/s low of 2000.

I have no idea what earnings will look like. But longer term this stock offers good opportunity.

2008 Mar 18 01:36 PM