Borders to Explore Sale, Suspends Dividend
U.S. book retailer Borders Group posted a fourth-quarter profit on Thursday but suspended its quarterly dividend and said it had launched a strategic review that will investigate selling the business.
The company said it had received financing commitment of $42.5 million from Pershing Square Capital Management and an offer to purchase certain of the company's international businesses pursuant to a $125 million backstop purchase commitment.
Borders posted a net profit of $ 64.7 million, or $1.10 a share, for the quarter, compared with a loss of $73.6 million, or $1.25 per share, a year earlier when it took large charges associated with the closing of Waldenbooks stores.
Excluding non-operating charges and discontinued operations, the company earned $84.7 million, or $1.44 a share.
Analysts on average expected $1.42 per share, according to Reuters Estimates.
Sales rose to $1.3 billion, representing a 2.8 percent increase on a year ago after excluding the impact of the extra week in fiscal 2006, according to the company.
Borders Chief Executive George Jones said though the company was on track to reach its 2009 financial targets, it would be slowed by the worsening economic conditions.
"We will be slowed in our progress and expect that we'll reach them later than originally anticipated," said Jones in a statement.
"Still, we believe that our strategic plan remains the right path toward achieving these goals," he said.
Borders, the No. 2 U.S. bookseller behind Barnes & Noble , began a turnaround plan last year. It is closing underperforming Waldenbooks stores, weighing options for its international units, and refocusing on its core U.S. store operations.
The retailer is trying to fend off competition not only from Barnes & Noble, but also from online retailers, where consumers have been turning for cheaper books, CDs and DVDs.