While books continue to represent the majority of our sales, we are also working
hard to expand other complementary categories. These efforts helped to drive
double-digit comp sales gains in movies and continued strong growth in gifts and
stationery during the fourth quarter. We also improved the performance of our cafes,
and continue to seek attractive third-party alliances that we believe can help
boost both food and beverage profits and incremental sales throughout our stores.
During the year, we intensified our efforts to measure and monitor customer
satisfaction, which we continue to drive to higher levels. According to our
research, customers rate product availability and personal service among our
greatest strengths, and two of the attributes that contribute most to customer
loyalty. We introduced a number of new training programs in 2002 to constantly
improve customer service and satisfaction. These programs are also aimed at
enhancing the skills and career advancement of our employees, and helping
us strengthen our reputation as a great place to work.
2. Driving International Growth
Borders Group remains the only U.S. retailer to own and operate a significant
number of book and music superstores internationally. During 2002, we expanded
our presence by opening eight new overseas Borders locations, ending the year
with 30 Borders stores throughout Australia, England, New Zealand, Puerto Rico,
Scotland and Singapore, and 37 Books etc. locations in the U.K. We also opened a
new distribution center in the U.K., doubling our usable square footage.
Our success internationally is based in large part on building on and leveraging
our company's core competencies. We work to perpetuate the initiatives that have
made Borders successful in the U.S., while recognizing and making adaptations for
cultural differences. For the year, International segment sales increased 25.1% to
$315 million. While its net loss increased during 2002, International generated
net income during the fourth quarter, and we aim to achieve breakeven performance
by year-end 2003.
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