We're also applying technology to improve our operational efficiency. A good example
is our Common Systems program. Common Systems is a long-term project that will enable
Borders and Waldenbooks businesses to operate on one common technology platform with
the goal of improving business processes and reducing our costs over the next several
years. In 2002, the focus of our Common Systems initiative included the development
and testing of new Product Flow-Receiving systems and procedures to streamline
backroom processes and increase inventory accuracy. We also introduced a new
PeopleSoft software system to improve the processing and management of human
resources information, payroll processes and benefits administration.
4. Maximizing Cash Flow at Waldenbooks
As the largest mall-based bookseller in the United States, Waldenbooks was hurt
by declining consumer mall traffic in 2002. For the year, the segment generated
$852 million in sales, a 5.5% decline compared to the previous year.
Despite this decline, Waldenbooks continues to contribute a significant portion
of our consolidated profits and free cash flow, and we are working hard to both
rationalize and enhance its business. During 2002, this included closing 53
under-performing stores, giving us a total of 778 Waldenbooks locations at
fiscal year-end.
During 2002, we performed an intensive analysis of all our Waldenbooks stores,
studying why some stores perform better than others, and looking for ways to
improve sales and productivity nationwide. As a result of this Peer-Based-Improvement
program, we have separated the stores into groups that share similar locations,
formats, mall productivity and competitive environments. By applying the "best
practices" of the most successful stores within each peer group, we expect to
boost their performance, and provide objective benchmarks for store managers to
monitor and evaluate their progress.
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