Full-year sales rose 6.1% to $3.7 billion, with $1.3 billion coming in the crucial fourth quarter. Cost of goods sold rose as a percentage of sales during the year, but a decline in SG&A expense and the company's revenue growth was strong enough to hold operating margins fast. They also powered an expansion of net margins to 3.5% from 3.4%, as well as net income growth of 9.6%. (EPS grew more quickly as buybacks lowered Borders' share count.)
"Big-company" behavior can be seen in the company's growth and financial outlook for the coming year. Expansion in 2003 -- including both domestic and overseas superstores -- slowed from 2002 levels. More Waldenbooks locations, meanwhile, were shuttered last year than in the year before. (The company didn't provide details for 2004 store expansion in its press release.)
The bookseller expects to see an acceleration of net income growth now that the international operations are profitable and Waldenbooks' same-store sales are flat to positive. This reflects management's emphasis on revenue growth but also cost management, operational improvements, share buybacks, and the dividend payouts the company initiated late last year.
It was altogether an interesting 2003 for Borders, which in November saw its online partnership with Amazon.com
Investors have enjoyed the ride, with the company's shares outpacing the S&P 500 over the last 12 months. In the end, with a solid balance sheet and strong free cash flows, Borders looks and acts like a mature retailer.
Dave Marino-Nachison doesn't own any of the companies in this article. He can be reached via email.