Can We Trust the Borders Bump?

One chain that is on the watch list of many industry observers this year for mass store closings is Borders Group. It is second place to Barnes & Noble in a flailing retail sector with only two major national chains pressured by technology.

Plus, it consistently reports weak earnings, at least, until its fourth quarter results came out earlier this week. Borders earned just under $60 million, nearly doubling what it brought in during the same year-ago period, and its stock soared as a result.

Borders also secured $700 million in financing and paid back a $42.5-million loan to shareholder William Ackman’s Pershing Square Capital. Executives also say that they have an e-book reader coming out that can compete with Apple’s hyped iPad. Additionally, management announced no concrete plans for superstore closings this year.

But how long will the good news last? Though fourth quarter earnings were favorable, Borders still lost just over $110 million during the fiscal year and Q4 same-store sales plunged 14%.

Is it just a matter of time before we see a lot of Borders doors closing, or can the retailer truly bounce back?

ALSO: Gap’s Brick-and-Mortar Athleta Stores Face a Big Obstacle: Lululemon

1 Response to “Can We Trust the Borders Bump?”

  1. 1 CraigSolve April 2, 2010 at 11:30 am

    Border’s aggressive distribution of 30-40% off coupons will drive traffic to their stores by people who really want to own books. The continued discounting by 40% the first week price of big releases like Rove’s book will promote foot traffic but will it keep Borders profitable? The celebration of the American experience through the possession of hard cultural objects may be the next victim of Obama’s attempt to level working Americans’ checkbooks and value system.

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