Published January 13, 2006
CHICAGO (AP) - Borders Group Inc. stock rose yesterday after the Michigan-based book retailer announced better-than-expected sales figures for its superstores in the United States, and a report indicated that buyout firms could be set to put in a bid for the company.
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Shares of Borders rose $2.29, or 10 percent, to close at $24.70 Thursday on the New York Stock Exchange.
After the close of trading Wednesday, the Ann Arbor company said sales at superstores open more than one year rose 2.2 percent in the fiscal fourth quarter, which ended Jan. 28.
The retailer had forecast sales would be flat to slightly lower at the stores. It attributed the increase to strong book sales. It also sells CDs and DVDs.
A report by the Financial Times said a number of large private-equity firms are considering a bid for Borders. The article said the decision to go ahead by the buyout firms would hinge on performance during the just-completed holiday period.
The buyout firms are reportedly poised to pay more than $25 a share, putting the value of the deal at about $2 billion, the FT reported. Officials at Borders weren't immediately available to comment on the report.
In announcing the sales data, Borders also raised the lower end of its earnings outlook for its fourth quarter. The company now expects to earn between $1.70 and $1.80 a share for the period, up from previous view of $1.60 to $1.80 a share.
Analysts were expecting earnings of $1.70 a share, according to Thomson Financial.
Dereck Leckow, analyst at Barrington Research, said Borders' stock was getting a boost Thursday because of the buyout speculation and the surprisingly strong same-store sales so far in its fourth quarter. The strong book sales were a good sign because that is one area on which Borders has focused, he said.
The book retailer's stock has been under pressure because the company is in an investment period, spending money on renovating its stores, Leckow said. That work has disrupted sales. Borders ended its renovation work for the current year during the third quarter so that work wouldn't affect sales during the important fourth quarter, which includes the holiday selling season.
