Borders Group Inc. is planning a fresh face for its U.S. superstores and is jumping back into online bookselling as part of a restructuring unveiled Thursday that includes closing nearly half of its Waldenbooks stores and the possible sale of most of its international businesses.
The nation’s second-largest bookseller, which also reported a fourth-quarter loss, said it will better tailor its superstores to local markets. It’s working on its own Borders.com e-commerce Web site and plans to publish exclusive books by celebrities, first-time authors and others under the Borders name.
“We need to reinvent our business to exploit the rapid changes taking place in how consumers access information and entertainment,” Borders Group Chief Executive George Jones said in a statement. “Our ultimate goal is to make Borders a vital community gathering place where people come together to see, touch, interact and learn — online and in-store.”
Borders.com currently takes shoppers to a site partnered with online retailer Amazon.com Inc., while a Web site for its stores allows shoppers to check inventories and reserve items. The Ann Arbor-based company expects the new Borders.com, under development since the fall, to launch early next year and be independently profitable in 2009.
In 2001, Borders abandoned its money-losing online business, turning it over to Amazon.com in a partnership between the companies. The launch of the new Borders site will end that partnership, Borders said. Seattle-based Amazon declined to comment Thursday on Borders’ announcement.
JP Morgan analyst Nancy Hoch said it makes sense for Borders to set out on its own again for online sales — especially since the arrangement with Amazon didn’t allow it to integrate its nearly 17-million strong in-store Borders Rewards loyalty program. An update to that program is expected soon.
“It’s just a necessary strategic decision,” she said.
Borders, meanwhile, is working on a new concept store prototype that will be refined this year and is expected to make its debut in early 2008.
“Our mission is to make Borders a headquarters for knowledge and entertainment,” Jones said in a conference call with industry analysts.
Borders shares closed down 73 cents, or 3.4 percent, at $20.70 in regular trading Thursday on the New York Stock Exchange.
Borders said it is exploring strategic alternatives for most of its international unit, including its United Kingdom, Ireland, Australia and New Zealand superstores and Books etc. business. Strategic alternatives often can include a sale of assets.
The effort doesn’t include the company’s Paperchase business, Puerto Rico stores or franchise operations in Malaysia and the United Arab Emirates. Borders also said its operations in Singapore will be maintained to support franchises.
Borders said it will cut the number of its Waldenbooks stores to about 300 by the end of next year from 564 at the end of 2006. Borders said it hoped to transfer as many employees as possible to other company stores.
Borders in the past has published literary classics, cookbooks and other titles under the company’s name, but the new effort will be significantly expanded, said Borders spokeswoman Anne Roman. Early projects will include a tour book due out in July from R&B singer-songwriter John Legend that will be available from Borders and at Legend’s concerts.
As part of the effort, Borders plans to release a thriller by Nick Santora, a writer for TV shows including “The Sopranos,” “Prison Break” and “Law & Order” in June, as well as a 50th anniversary retrospective of the Grammy awards, a book that is expected to be out in October. Borders said other deals are in the works.
Borders said it won’t provide future sales or earnings guidance during its restructuring. This year will be one of “transforming and stabilizing — but not significantly improving — financial performance,” it said.
The company reported a loss of $73.6 million, or $1.25 per basic share, for the three months ended Feb. 3 compared with a profit of $119.1 million, or $1.78 per diluted share, in the previous year.
For the full year ended Feb. 3, the company reported a loss of $151.3 million, or $2.44 per basic share, compared with a profit of $101 million, or $1.42 per diluted share, in the previous year.
Borders uses basic per-share results when it records a loss and diluted per-share results when it sees a profit.
The current quarter’s results included $2.86 per share in charges related to goodwill, store closure costs and accelerated depreciation costs related to store remodeling.
Excluding the charges, earnings totaled $1.61 per share versus $1.87 per share a year ago.
Analysts polled by Thomson Financial were looking for a profit of $1.63 per share.
Quarterly revenue edged up to $1.52 billion from $1.48 billion a year ago. Consensus estimates put sales at $1.48 billion. Same-store sales, or sales at stores open at least one year, fell 2.8 percent at the company’s domestic Borders superstores.
