I love to read. Fiction, nonfiction, magazines, whatever -- I'm not terribly discriminating. Curiously, though, I rarely finish one book in its entirety before starting a new one. As a result, I have an eclectic mix of books stacked up on my bedside table right now -- a dusty science fiction relic, a history of the Revolutionary War, Clive Cussler's novel Black Wind, and the bible of value investing, Ben Graham's TheIntelligent Investor -- each one bookmarked at various stages of completion.
You'd think a bookseller like Borders Group
Competition abounds in the book industry, which has been limited to slow, single-digit revenue growth. Still, larger rival Barnes & Noble
Borders' mall-based Waldenbooks chain also continues to struggle, with sales dropping 5% for the year to $780 million amid flagging comps and the closure of 43 underperforming stores. The company is converting many of these units to Borders Express stores. In all fairness, though, Barnes & Noble's mall-based counterpart, B. Dalton, hasn't fared much better lately.
One bright spot for Borders is in its international operations. Net income in that segment jumped by almost 50% during the quarter, and full-year sales, aided by favorable currency translations, rose by 25% to top the half-billion mark.
With books becoming commodities, there are few opportunities to raise prices, and that has kept margins in check. The situation is particularly true for hot best-sellers; Scholastic's
Borders' reasonable valuation makes for an attractive cover, but a quick flip through the pages reveals a capital-intensive business with slow growth and thin margins. There are lots of stocks on the shelves out there; I'd rather take a different one to the checkout counter.
Peruse these other looks at the book biz:
Fool contributor Nathan Slaughter owns none of the companies mentioned.