Borders Same Store Sales Down 13%

After the close, Borders reported their third quarter results and as predicted they were markedly off the same period last year. Comparable store sales for Borders superstores decreased by 12.8% in the third quarter, and with music excluded, declined by 10.6%. Same-store sales at Waldenbooks decreased by 7.7% for the period. Impairment charges pushed their loss from continuing operations to $172mm ($2.85) versus $40mm ($0.63) last year. Without those GAAP adjustments the profit performance was on par with last year.

From the press release:

"Borders has successfully reduced debt, improved operating cash flow, lowered expenses, improved gross margin-excluding occupancy-and improved inventory productivity during a time of extreme economic challenge," said Borders Group Chief Executive Officer George Jones. "We stated at the beginning of this year that strengthening our balance sheet is our top priority and we are delivering results. We'll remain keenly focused on these critical initiatives, and in addition, will increase our efforts to drive further gross margin improvement. All of the changes we are making will position Borders Group to compete more effectively."

Other items of interest:

• Management is no longer contemplating a sale of the company so what does that mean.....
  
• Cash flow has increase by $110mm however their ending $38mm in cash includes $94mm from the sale of discontinued ops.
• The company's AP is $12omm less than the same period last year which means they are buying less product.
• Trade creditors of $613mm exceeds the market cap of the company by 6x
• Debt, including the prior-year debt of discontinued operations, was reduced from a year ago by 34.2% or $273.1 million at the end of the third quarter to $525.4 million (see above point).
• The company's cost elimination program is expected to produce $10mm more than planned - an annual total of $70mm

More tomorrow after the conference call. After the report, their shares are off 17% but at this point that's only 30cents.