The company's year-over-year same-store sales decreased 0.7% at Borders superstores, while they were down 3.1% at its mall-based Waldenbooks units. Total consolidated sales were up 2%, to $847.2 million, while the retailer lost $5.3 million during the quarter, compared to a $2.3 million increase over the same year-ago period.

Best-seller book sales dropped 30% from last year's Q1, and music sales were down 13%. International sales in the United Kingdom also slowed down.

For Borders' Q2, executives predicted a low, single-digit increase in same-store sales as a result of the new Harry Potter release. If the book is not released, sales would be flat, they said. At Walden, the popular book could also lead to a low, single-digit increase and without it, a low single-digit decrease.

Borders' capital expenditures during the quarter were $41 million, and executives forecast spending a total of $175 million on remodels and new stores. The company is converting 75 to 100 Waldens into Borders Express units, remodeling 100 superstores by adding Seattle's Best coffee bars as well as Paper Chase stationary centers, among other amenities (at a cost of $350,000 per unit) and opening 19 new US superstores, 14 international units and 15 airport locations.

Borders currently operates about 460 superstores, 650 Waldenbooks and 81 international units.

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