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BGP Analysis & Videos »
BGP: Bull or Bear?
The Real Reason Borders' Stock Has Surpassed its Target
BGP
I was emailed a research note on Borders (BGP) by a reader and based on that, we can take closer look at FY 2009.
Deutsche Bank - Equity Research
Borders Group {Ticker: BGP.N, Closing Price: 6.55, Target Price: 6.00, Recommendation: Hold}
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Borders Improves Results Quarter After Quarter
BGP
The really good news here is the reduction of debt by almost 40% YOY.
From the release:
<><>Borders Group, Inc. (BGP) today reported results for the second quarter, ended Aug. 2, 2008. The company generated a second quarter loss from continuing operations of $11.3 million or $0.19 per share, which represents an improvement over the same period last year when Borders Group recorded a loss of $18.1 million or $0.31 per share. On an earnings per share basis, this represents an improvement of 38.7%.
In the first half of the year, operating cash flow from continuing operations improved by $195.7 m...
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Borders Group Inc.
BGP
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Borders Group, Inc., through its subsidiaries, operates book, music, and movie superstores. It also operates mall-based bookstores. The company's Borders superstores segment offer books, bargain books, music, movies, and periodical titles across various categories, which include jazz, classical, and world music, as well as a range of DVDs focusing on new release and catalog movies. It also provides gifts and stationery, as well as feature cafes. Its Waldenbooks Specialty Retail stores segment operates small format stores in malls, airports, and outlet malls that offer new releases, hardcove...
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Borders Shows Good Progress...But Industry Challenges Might be Too Much
BGP
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5/28 - "This quarter, while the bottom line may be not there yet, we saw evidence of the change delivered by Mr. Jones. He has un-tethered himself from Amazon's grasp in the online arena at surprisingly little costs, he is focused on reducing working capital and expenses, and developing a new concept to compete with Barnes & Noble and online entities.
Unfortunately for Mr. Jones, whether the holes on this ship are too big to be repaired is still a question mark. Unlike Home Depot, which we believe is in a cyclical decline, one can argue that booksellers are in a secular decline. On-line bo...
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Recent Borders Moves Show Little Traction, But Strategy is Sound
BGP
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5/29 - "BGP’s 1Q2008 results and call suggest strategic moves in the right direction, including a broad focus on profitability over revenue growth, a substantial cost-cutting effort, and impressive inventory reductions. We see little evidence of these efforts in recent financial results, and are cutting our estimates, 2008 to a loss of ($0.14) from EPS of ($0.10), 2009 to $0.30 from $0.45, and 2010 to $0.52 from $0.82. We are trimming our price target to $6.25 from $6.50, as the impact of estimate cuts has blunted valuation adjustments associated with the firm’s increasingly returns-oriente...
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Borders' New Website an Act of Desperation
BGP
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5/27 - "Borders hopes that taking its site in house will compensate for its sputtering bricks-and-mortar store business. Unfortunately, and more likely, Borders will now be able to fail at two businesses instead of one."
"Will Borders.com succeed? Almost certainly not. To succeed in a commodity ecommerce business like books, you need scale, and as the chart below shows, Borders has none.
So what should this proud possessor of not one but two crappy businesses do? Sell the company immediately."
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Borders Results: Bland and Good
BGP
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5/28 - "Borders posted a loss of 53 cents per share vs a 63 cent loss last year. Same-store sales at Borders U.S. superstores, or sales at stores open at least a year, fell 4.1 percent. Total consolidated sales, at $784.7 million, were down 1.0% over a year ago...The really encouraging news was that debt was reduced to $591.9 million at the end of the first quarter from $722.8 million at the end of the year-earlier quarter and cash flow improved by $133 million."
"Why not be discouraged?
The new website just went up a started yesterday. It will be a profit center this year and if you have...
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Borders to Sell Paperchase: A Good Short-Term Move
BGP
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Looking for a price tag of about $80 million, borders (BGP) has put the UK Paperchase stationary retailer up for sale. <>
Paperchasehas more than 100 stores and concessions, including ones in House ofFraser and Selfridges department stores in the UK. In 2005 it began opening concessions in US Borders stores.
Reports are that Goldman Sachs (GS) has been hired to conduct a review that ought to lead to a sale. Iam not sure this is the best thing long term for Borders but, given thecurrent retail environment, it is a necessary step to pay down somedebt, restore more liquidity and let's be honest...
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Why We Doubled Our Position in Borders
BGP
Excerpted with permission from the monthly letter to investors in Mr. Tilson's T2 Partners Fund:
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Borders Group has been a terrible investment so far, as the stock has suffered from a weak macro environment, negative investor sentiment and numerous management missteps. Things got so bad recently that the company faced a liquidity crunch and was forced to do a dilutive emergency financing with its largest shareholder, Pershing Square Capital Management.
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barnes and Noble getting it from both sides
BGP
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To be honest, I'm not a big fan of chain bookstores. First off, my cousins own a large independent bookstore in Massachusetts, and, as long as business is good for them, my big "family discount" is safe. However, beyond my personal connections, I don't really like the way that chain bookstores control access to titles, artificially control the bestseller lists, and squeeze out independent booksellers. Frankly, it just creeps me out.
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Borders: The High Cost of Poor Performance
BGP
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3/20 - "In fact, there were few surprises in the quarter itself, which the company reported at the same time...Superstore comps were up 2.1%, operating profit increased, and inventories were well-controlled. Net debt fell 33% sequentially, in line with the typical seasonal pattern, but was up 24% year-over-year...Trading at less than 4X EBITDA, we believe valuation at current levels fairly captures the risks facing BGP and thus we maintain our neutral opinion."
"The Borders news highlights Barnes & Noble’s (BKS, B-2-7, US$28.00) superior financial strength, since BKS is in a net cash posit...
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About Borders Group Inc.
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