Borders same-store DVD sales fall 22%

Bookseller converts multi-media space to cooking, children's books

By Danny King -- Video Business, 5/27/2009

MAY 27 | PHYSICAL: Borders Group's fiscal first-quarter same-store sales of DVDs plunged 22% as the second-largest U.S. bookstore chain behind Barnes & Noble began to convert store sections devoted to movies and music to categories such as cooking and children's books.

The company cut floor space devoted to multi-media content from a year earlier by about a third, Borders chief financial officer Mark Bierley said on a conference call with analysts this morning. The reduction was part of an effort to cut costs by decreasing total inventory by 22% from a year earlier.

"It gives us the opportunity to increase the inventory and space devoted to growth categories" such as children's, cooking and bargain books, said Bierley, who added that same-store sales of CDs dropped 28%.

Such DVD and CD sales declines helped cause a 13.5% decrease in overall fourth-quarter same-store sales at the retailer's primary Superstore branch. Borders' net loss for the quarter ended May 2 widened to $86 million, or $1.44 a share, from $31.7 million, or 53¢, a year earlier, as total sales fell 12% to $650.2 million, the company said in a statement yesterday afternoon.

Borders was expected to lose 50¢ a share on sales of $637.3 million, the average analyst estimates in a Thomson Reuters survey.

Borders in January replaced its chief executive and chief financial officers after reporting that holiday same-store sales dropped 14% from a year earlier. CEO George Jones, who had run the company since July 2006, was replaced by Ron Marshall, former CEO of food distributor Nash Finch Co. and founder of private-equity firm Wildridge Capital Management.

Bierley, Borders’ senior VP of finance, replaced chief financial officer Ed Wilhelm, who had been the company’s financial chief for eight years.