Borders Reports Loss, Good Potter Numbers

The company's loss compares unfavorably to its Q2 2006 net loss of $18.4 million, or 29 cents a share. However, with "Harry Potter and the Deathly Hallows" pushing sales up by 10.4% more than last year, at $945.1 million and domestic comp sales up 4.6%, executives said during a conference call that they had reason to smile. The firm sold 1.2 million of J.K. Rowling's last wizard installment on the first day it went on sale, and about 1.7 million total in the quarter.

"Even without the Harry Potter book, domestic same-store sales are up 0.4%, that's a big improvement over the 0.9% decline in the first quarter," said CEO George Jones during the call. "This shows that our business had already started to turn around before Harry Potter. What we're doing is beginning to work, but we have a lot of hard work left to do."

The company's international segment fared the best during the quarter, with total sales up 31.2% to $169.8 million. Comp store sales overseas improved 8.2%, with even a 5.6% increase without J.K. Rowling's book. However, the company has indicated it may sell this division to raise capital.

Jones and CFO Ed Wilhelm talked more about shoring up the business and improving marketing and transaction figures than about store growth. The company opened four new superstores in the US, ending the quarter with 506 domestic stores, and more than 1,200 stores worldwide. This number includes Waldenbooks, now down to 300 stores, Jones said. "We will continue to close these stores with a goal toward creating a small but much more profitable chain," he said during the call. "We're working diligently to improve in the next quarter and the upcoming holiday season." Trading of the stock, labeled BGP, ended the day at $14.98, after starting the day at $14.55.