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Borders Group in the US saw first quarter sales decline 12.1% year-on-year, to $641.5m. But its profits improved after reducing overhead and "inventory investment". Chief executive Ron Marshall said it was now looking to do "a much better job of driving sales".
Sales fell across the company's two chains. Borders and Borders.com saw sales decline 10.7%, to $536.7m, with comparable sales down 13.5%. Speciality division Waldenbooks saw a drop of 19.9%, to $76.9m, following 11 branch closures.
But the company reduced its "inventory investment" by 22% over the quarter, spending $893m compared to $1.1bn a year ago. Capital expenditure was also cut from $27m to $2.4m.
The company reduced its operating loss by almost half over the same period last year, down from $30.5m to $15.9m. But one-time expenses of $70.1m relating to store closures and redundancies, resulted in a loss from continuing operations of $86m compared to a loss of $30.1m in last year’s first quarter.
In a statement, Marshall said: "Make no mistake about it, we have much more work to do and will continue to maintain our financial discipline. At the same time, we know that we cannot save our way to prosperity. Our long-term success will come from doing a much better job of driving sales and that's where our focus is right now."
Chief financial officer Mark Bierly told the US trade paper Publishers Weekly that sales were down because of the company's decision to reduce inventory, as well as issues with the retail sector in general. He was reported as saying disruptions caused by that process should come to an end by the second half of the year.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4fxtT9cHlRk&... target="_blank">Bloomberg later reported a 13% rise in Borders Group's share price, up 33 cents to $2.90, thanks to the company's cost-cutting measures.