"We are no longer contemplating a transaction," Jones said. "The process we undertook was very comprehensive; however, it has also been a notable distraction. We are pleased to have it behind us."
However, Borders is retaining its right to exercise a put option to sell its Paperchase chain to Pershing Square Capital Management for $65 million, and is in discussions with Pershing Square regarding alternative financing.
Pershing Square has been busy. In late October, the hedge fund manager, a significant shareholder in Target Corp., proposed a spinoff of the discounter's real estate into a REIT, only to defer discussions when Target demurred. In late November, Pershing Square acquired a 20% stake in struggling mall developer General Growth Properties.
Borders' consolidated sales were $682.1 million, down 10% from the same period last year. On a GAAP basis, the company reported a consolidated loss from continuing operations of $172.2 million, compared to a GAAP loss of $40 million a year ago. Comp-store sales for Borders superstores dropped 12.8%, and with music excluded, declined by 10.6%. Same-store sales at Waldenbooks decreased 7.7%.
To some degree, cost-cutting initiatives may have been too effective, Jones said.
"Our inventory efforts are likely responsible for at least some of the same store sales decline," he explained. "We are taking aggressive measures to identify where we may have reduced inventory too deeply in certain stores and are carefully adding back inventory on a store-by-store basis."
The company also has completed the rollout of borders.com kiosks to each of its stores to increase cross-channel shopping, and has reduced space dedicated to music by 7%, reallocating it to children's and bargain books.
Borders Group operates more than 1,100 stores worldwide primarily under the Borders and Waldenbooks brand names.
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