It has been a roller-coaster ride lately for shareholders of Borders Group
Yesterday, there were few surprises, as the company posted third-quarter results that were in line with the reduced targets. Net income swung to a $1.5 million ($0.02) loss from last year's $0.5 million ($0.01) profit, on sales that inched up 2.6% to $838.6 million. Same-store sales dropped 1.6% at Borders Superstores, whereas rival Barnes & Noble
Both companies, though, continue to see weakness at their mall-based outlets, as comps at Barnes & Noble's B. Dalton chain slipped 3.3%, and those at Borders' Waldenbooks fell 4.1%. Some of that weakness was offset by continued strength in the international segment, where revenues jumped 25.2% (15.3% excluding currency translation) to $118.6 million.
The relatively soft quarterly results illustrate an industry risk that neither company is immune to -- traffic suffers when no blockbuster bestsellers are released. Recent quarters have been buoyed by political and war-related commentary and hits such as The South Beach Diet and TheDa Vinci Code. This time around, though, Scholastic's
Both retailers were quick to point the blame for slumping store traffic in the direction of the bestseller category. Fortunately, Borders won't have long to lick its wounds, as the busy holiday season is just around the corner. The highly seasonal company typically logs most of its profits in the fourth quarter, and last year recorded all but one cent of its annual earnings in the last three months. Management is anticipating last year's $1.50 earnings to increase to $1.55-$1.62 (including non-recurring charges of $0.04-$0.06).
Investors who have found Borders' plot too dull and predictable may want to stick around for the climactic ending, as the outcome of this year's story hinges on what transpires over the last two chapters.
Do you have a dream of one day finding your own novel in a bookstore display? Find some motivation in the Fool's Aspiring Writers discussion board.
Fool contributor Nathan Slaughter is rarely lured by the shiny hardback charm of a popular bestseller and prefers the dusty corners of a used bookstore. He owns none of the companies mentioned.