Borders Improves Results Quarter After Quarter

Aug.26.08 | About: Borders Group, (BGPIQ)

The really good news here is the reduction of debt by almost 40% YOY.

From the release
:

Borders Group, Inc. (BGP) today reported results for the second quarter, ended Aug. 2, 2008. The company generated a second quarter loss from continuing operations of $11.3 million or $0.19 per share, which represents an improvement over the same period last year when Borders Group recorded a loss of $18.1 million or $0.31 per share. On an earnings per share basis, this represents an improvement of 38.7%.

In the first half of the year, operating cash flow from continuing operations improved by $195.7 million. The company generated operating cash of $50.7 million from continuing operations in the first half of the year compared to operating cash used of $145 million in the same period a year ago with the improvement due to tighter management of inventory and other working capital.

Inventory from continuing operations decreased at cost by $181.7 million in the second quarter compared to the same period last year. Debt -- including the prior-year debt of discontinued operations -- was reduced by approximately 37% or $272.7 million at the end of the second quarter to $465.7 million, which compares to $738.4 million for the same period a year ago. The debt reduction was driven primarily by improved management of inventory and other working capital, lower capital expenditures, and proceeds from the previously announced sale of the company's Australia/New Zealand/Singapore businesses.

Total consolidated sales from continuing operations in the second quarter, at $749.2 million, were down 6.9% over a year ago.

So, we know the economy is slowing and retail sales are suffering, yet quarter after quarter Jones is delivering increasingly positive results for shareholders.

"We have not only improved profitability, but also substantially reduced debt, improved cash flow and significantly strengthened our balance sheet," said Borders Group Chief Executive Officer George Jones. "Our focus on expense reduction, inventory management and improved gross margin is clearly working, and we have managed to show substantial improvement in a very difficult retail environment. We will maintain this discipline and continue to manage the company prudently while also addressing the need to improve the top line."

How did online sales go? In the second quarter, Borders.com generated sales of $7.4 million. This compares to "sales at BarnesAndNoble.com (NYSE:BKS)were $99.8 million for the quarter a 3.6% comparable sales increase ". It means Borders has a lot of room to grow. All said, $7.4 million of sales in only 8 weeks of Q2 bodes very well indeed for the upcoming quarter that will have a full quarter of results to it for the online business.

Disclosure: Long BGP