Borders Will Cut Media Floor Space, Posts Q1 Loss27 May, 2009 By: Billy Gil
During a May 27 conference call to discuss first-quarter (ended May 2) results, Borders Group CEO Ron Marshall told financial analysts Borders would reduce floor space devoted to home media as DVD sales fell 22%.
Marshall said a major priority for Borders moving forward would be “addressing this intermediation within our business, particularly as it concerns music and video.” He said that “digital options have overtaken physical CD and movie sales,” and reducing music and video product in lower-tiered stores would make room for growth products such as cooking, children’s product and bargain books.
“The expansion of these categories in the space formerly held by multimedia will create a short-term disruption and possible sales impact,” Marshall said. “But it’s right for the long-term.”
Borders widened its first-quarter loss to $86 million, compared to a loss of $30.1 million a year ago. The No. 2 bookseller encountered $70.1 million in charges during the quarter, and revenue fell 12% to $641.5 million compared to the previous year’s quarter. Same-store sales at Borders superstores decreased 14%, compared to the same quarter a year ago.
Similarly to No. 1 bookseller Barnes & Noble a week ago, No. 2 bookseller Borders bested expectations for its first-quarter loss, with shares up 11% to $2.85 May 26 in after-hours trading.