- The Washington Times - Wednesday, April 1, 2009

PORTLAND, ORE. (AP) - Borders Group Inc. will cut its costs by another $120 million and it expects sales to keep sliding in 2009, the company reported in a regulatory filing Wednesday.

The bookseller said it will continue to trim its corporate, store and distribution expenses, expanding on major cuts made in 2008 such as closing stores and slashing jobs.

Borders shares initially plunged in trading but rose 20 cents, or more than 30 percent in trading, to 83 cents by midday trading.

The struggling chain, which operates more than 900 Borders and Waldenbooks in the U.S. and Puerto Rico as well as a UK-based stationery business, has been hurt by rising competition and consumers’ spending cuts.

Borders said most of its savings initiatives are already under way and it will continue closely monitoring its expenses.

The filing follows the Ann Arbor, Mich.-based company’s report late Tuesday that its profit dropped 54 percent in the fourth quarter on significant charges and dismal sales during the holiday season.

Its sales fell nearly 13 percent for the quarter compared with a year earlier and nearly 9 percent for all of 2008 compared with 2007.

Borders did not issue specific earnings guidance, but managers said that _ given the economy and its impact on consumer spending _ the company’s sales are likely to continue to drop for the year.

Executives said Borders will continue to focus on improving its cash flow and profitability while trying to reassert itself as the bookseller for “serious readers.” It also will beef up some underdeveloped product categories such as cooking and children’s books and move away from unprofitable categories like music, Chief Executive Ron Marshall told The Associated Press Tuesday.

“All in all, we are doing whatever is necessary to get back on firm financial footing,” Marshall said Wednesday in a conference call with investors. “That said, we understand you can’t save our way to prosperity. We must sell our way to success.”

Deutsche Bank wrote in an analyst note that the company’s recent financial improvements, including a deal to extend its $42.5 million senior secured-term loan by a year, has given Borders some “breathing room” for the fiscal year. But Deutsche Bank said the company needs to focus its efforts primarily on a recovery plan to boost sales.

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