Despite a struggling economy and lackluster retail environment, Borders Group
modestly increased sales, we improved our earnings, and continued to expand our
domestic and international presence. While the holiday season and fourth quarter
fell short of our goals, we ended fiscal 2002 in a fundamentally strong position:
- Consolidated sales rose 2.9% to a record $3.5 billion. For the year, sales for our Borders and International segments increased 3.8% and 25.1%, respectively, while sales at Waldenbooks declined 5.5%.
- Consolidated earnings per share increased 28.3% to $1.36 per share.
- We maintained our strong financial position by ending 2002 with cash, net of debt, of $106.4 million, equal to our position one year ago.
Disappointingly, our sales growth was not as strong as in past years. This
contributed to a decline in the value of Borders Group stock of approximately
19% during calendar year 2002, compared to a drop of just over 24% in the S&P 500
for the same period. Leveraging our strong cash position, we returned approximately
$75 million to shareholders in the form of stock repurchases, and we intend to use
stock repurchases as a core strategy for increasing shareholder value.
Strong Moves for a Soft Market
On a relative basis, Borders Group continued to outpace the industry in 2002,
increasing our average monthly share of U.S. retail book and music sales. In
typical growing markets, those share gains would have translated into sales
increases. But book and music industry sales declined in 2002 and our performance
suffered as a result. Comparable store sales for our Borders segment declined 1.2%
for the year. Waldenbooks' comparable store sales fell 3.2%.
Print Letter to Shareholders (PDF)
