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ANN ARBOR, MI-Borders Group’s new store openings for this year are essentially complete, as the company has cut capital expenditures to focus on strengthening its bottom line. But it will expand its new web site in-store, executives said at the company’s second quarter conference call.

All but one of 14 new superstores (including two relocations) planned for this year have opened, said Ed Wilhelm, senior VP and CFO. All are in the company’s new concept, which reduces the space allocated to music, giving that space to children’s and bargain books.

“We continue to be very pleased with the performance of our new concept stores,” Wilhelm said. “We will be applying what we learn from these to the rest of the chain where appropriate.”

The company opened four new Borders superstores in the United States during the period — all of them new concept stores — and ended the second quarter with a total of 518 domestic superstore locations. The number of Waldenbooks stores was reduced from 532 at the close of the second quarter 2007 to 468 at the end of the quarter.

In coming months, the company’s new Borders.com e-commerce site will be introduced via kiosks to the superstores to become a true “cross-channel retailer,” according to CEO George Jones. “We made a true decision to get back into that business.”

“There continues to be a lot of opportunity in that area, and it will be a key driver for cash flow for us going forward,” Jones said.

Consolidated sales from continuing operations were $749.2 million, down 6.9% from the same period last year. At Borders domestic superstores, comparable-store sales decreased by 8.9%, in significant part because of exceptional sales in the second quarter of last year, when the last Harry Potter book was released. Excluding the Potter factor, comp-store sales would have declined 5.1%. Waldenbooks’ comps declined 7.0% factoring in Potter, 1.4% without. But profitability has improved: the company lost $11.3 million, down from a loss of $18.1 million in the same period last year.

The international segment continues to downsize: During the quarter, Borders completed the sale of its Australia/New Zealand/Singapore businesses. It continues to examine strategic alternatives for its London-based Paperchase business, Jones said. Three Borders superstores in Puerto Rico and the company’s franchise operations in the United Arab Emirates and Malaysia remain.

Borders Group operates more than 1,100 stores worldwide primarily under the Borders and Waldenbooks brand names.

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