- agressive internet expansion will be negative by .12 to .14
- sales rose at stores
- they do not record gift certificates as revenue until used (nice conservative accounting)
01/06 18:40 Borders sees Q4, fiscal 1998 EPS below estimates
(Adds details on gift certificates in third graph)
ANN ARBOR, Mich., Jan 6 (Reuters) - Borders Group Inc. <BGP.N> said Wednesday that a fourth quarter shortfall in sales due in part to severe weather meant the book and music retailer will not meet fourth quarter and fiscal year earnings estimates.
Citing major storms in key markets and an increase in gift certificate sales, which are not reported until redemption, the company expects to report full year earnings of $1.14 to $1.18 a share, about 4 to 7 percent below consensus estimates. In November, the company said it expected to post earnings of $1.22 a share for its fiscal year ending in January.
Gift certificate sales are projected to increase on a comparable basis by about 40 percent as a result of the introduction of a new electronic gift card and other gift certificate sales initiatives, the company said. That represents an unspecified shift of some sales from merchandise that are booked when the sale is made to gift certificates, which are not booked until they are redeemed.
According to First Call, which tracks estimates, analysts on average expected fourth quarter earnings of $1.14 a share and full year earnings of $1.22.
Borders said its online business will post a fiscal 1998 loss of about 12 to 14 cents a share, compared with a loss of 7 cents a share in fiscal 1997.
Stores, including international, are expected to show fiscal 1998 earnings of about $1.27 to $1.31 a share, up 21 to 25 percent from the $1.05 reported the previous year.
Borders expects fourth quarter sales at Borders stores open more than a year will rise about 2 to 2.5 percent, but fourth quarter Waldenbooks same-store sales will be flat to 0.5 percent lower. Including the benefit of gift certificate sales and excluding the impact of January storms, Borders' fourth quarter same-store sales would have risen about 4.5 to 5 percent, the company said.
"While we are disappointed that we will fall short of earnings guidance for the first time since our initial public offering, we are encouraged by Borders' underlying fourth quarter comparable store sales performance," Phil Pfeffer, chief executive of Borders, said in a statement.
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