About Borders Group, Inc.

Headquarters
100 Phoenix Drive
Ann Arbor, MI 48108
Phone: (734) 477-1100
Web site: www.borders.com

Leadership

George Jones President and Chief Executive Officer	Kenneth Armstrong Executive Vice President of U.S. Stores	Robert Gruen Executive Vice President of Merchandising and Marketing
Edward Wilhelm Executive Vice President, Chief Financial Officer	Thomas Carney Senior Vice President, General Counsel and Secretary	Daniel Smith Senior Vice President, Human Resources

 

Company Overview

Headquartered in Ann Arbor, Mich., Borders Group, Inc. is a publicly held company with 2006 consolidated sales through its subsidiaries of $3.8 billion. The company’s stock trades on the New York Stock Exchange under the symbol BGP.

Through its subsidiaries, Borders Group employs approximately 30,000 people and operates over 1,100 worldwide, including more than 500 Borders superstores in the U.S.; 3 Borders stores in Puerto Rico; and approximately 471 stores within its Waldenbooks Specialty Retail segment.

In February 2008, the company opened its first concept store in Ann Arbor, Mich and as of June 2008 nine concept stores are in operation. The company will open a total of 14 concept stores by the end of 2008.

In 2004, the company acquired Paperchase Products Limited, a London-based stationery and gift retailer with more than 117 locations throughout Great Britain, including many on London’s busiest retail streets. Since 2004, Paperchase shops have been added to more than 329 Borders superstores. In October 2007, Borders opened its first stand-alone Paperchase store in the U.S. on Boston’s Newbury Street. A second stand-alone Paperchase store opened May 2, 2008 in Glendale, Calif.

Borders stores provide millions of customers with a rich shopping experience. In addition to offering a vast assortment of books, music, movies and other entertainment items, Borders stores provide a relaxing and engaging atmosphere where customers can browse a vast inventory of titles, meet up with friends and family over a cup of coffee, enjoy a special in-store event, or participate in a community-centered activity.

Revitalizing, Refocusing and Reinventing Borders

In March 2007, Borders Group presented a long-term strategic plan to drive a turnaround of the company. The plan calls for (1) revitalizing the domestic superstore business in the U.S.; (2) right-sizing the Waldenbooks Specialty Retail segment; (3) seeking strategic alternatives for the majority of the International segment; (4) and leveraging innovation, technology and strategic alliances to differentiate Borders in the marketplace. 

1. Revitalizing the Domestic Superstore Business

Borders is focused on the following five key areas to help revitalize the U.S. superstore business.

• Improving key retailing practices – Borders is standardizing the best retail practices across all stores, including improving end caps, focusing on sales awareness, bookselling basics and making the most of store visits and interactions with customers.

• Borders Rewards^® – Borders is leveraging its rapidly growing Borders Rewards^® program, which, as of June 2008 has more than 26.5 million members, to motivate customers to visit stores, while employing customer data to tailor promotions that mee specific customer needs and interests.

• Destination Businesses – Borders is designating several “Destination Businesses” in lifestyle and other categories that will offer such a unique and outstanding experience that customers will recognize Borders nationwide for these categories.

• Concept Stores – Borders opened its first concept store on February 14, 2008 in Ann Arbor, Mich. and will open 13 additional concept stores in 2008. The breakthrough retail concept brings together destination businesses, technology and experiential elements that dramatically enhance the shopping experience.

• Exclusive and Proprietary Publishing – Borders has begun publishing exclusive and proprietary books and CDs to distinguish the Borders brand and drive high margin sales.  The first novel published – Nick Santora’s “Slip & Fall” – reached national bestseller lists.

 

Additional Facts About Borders Domestic Superstores

• Borders operates more than 500 Borders superstores in the U.S. Each is distinctive in appearance and architecture and is designed to complement its local surroundings.

• Borders staff is always happy to help customers find what they’re looking for. The retailer takes special care to employ a knowledgeable and diverse staff with  a passion for books and entertainment, and who reflect the diverse communities that Borders serves.

• Borders superstores each stock up to 200,000 titles across numerous categories including many hard-to-find titles. The titles at stores reflect the interests of the communities they serve. More than half of all titles are unique to each store. 

• Borders superstores average 24,800 square feet in size, including approximately 13,000 square feet devoted to books, 2,900 square feet devoted to music, 800 square feet devoted to newsstand and 900 square feet devoted to movies.

• As of June 2008, 479 Borders superstores feature Seattle’s Best Coffee^® cafes. Approximately 1,400 square feet of a typical superstore is dedicated to the cafe.

• As of June 2008, 329 superstores feature Paperchase shops, which sell unique and fashion-driven stationery, gift packaging, greeting cards, art paper and materials, seasonal items and other gifts. The typical Borders superstore devotes approximately 900 square feet to a Paperchase shop.

• Borders stores host many in-store events throughout the year including author readings and signings, music performances, children’s storytime events and other gatherings, bringing together members of the community to enjoy the knowledge and entertainment Borders stores provide.

 

2. Right-sizing the Waldenbooks Specialty Retail Segment

Right-sizing the Waldenbooks Specialty Retail segment is another key part of Borders Group’s long-term strategic plan. In order to better focus resources on its core U.S. superstore business, Borders Group is executing an aggressive program to close underperforming stores in this segment. It is also retaining locations that meet acceptable profit and return on investment, and in those stores, is changing product mix and format to drive sales and profitability.

Additional Facts About the Waldenbooks Specialty Retail Segment

• The Waldenbooks Specialty Retail segment consists of the following (as of June 2008):

• Waldenbooks stores (296 locations)

• Borders Express stores (138 locations)

• Borders airport stores (25 locations) 

• Borders outlet stores (12 locations)

• Day by Day Calendar Co. seasonal kiosks that operate during the holidays (over 700)

• Waldenbooks Specialty Retail stores average approximately 3,800 square feet in size and carry an average of 19,000 titles, ranging from 9,000 in an airport store to 31,500 in a large format store.

3. Refocusing Investment - International

Borders Group has completed the strategic alternatives process for its UK and Ireland divisions as well as its Australia/New Zealand/Singapore businesses. It continues to explore strategic alternatives for its Paperchase business. The company is not exploring strategic alternatives for its Puerto Rico stores or franchise operations in Malaysia (four superstores) and the United Arab Emirates (U.A.E.) (four superstores).

U.K. & Ireland – In September 2007, Borders sold a majority interest in its U.K. and Ireland subsidiaries to Risk Capital Management, a London-based private equity investor. The transaction included all 41 Borders superstores located in the U.K. and the Borders superstore in Ireland, as well as all 28 Books etc. stores in the U.K.

Australia & New Zealand –In June 2008 Borders sold 100 percent of its Australia/New Zealand/Singapore businesses – which includes 30 Borders superstores – to A&R Whitcoulls (ARW), the leading Australasian retailer of books and related products owned by private equity firm Pacific Equity Partners (PEP).

 

Additional Facts About the International Segment

As of June 2008, Borders Group has 3 superstore locations in Puerto Rico.

In 2004, the company acquired Paperchase Products Limited, a London-based retailer that offers a unique assortment of stationery, gift packaging, greeting cards, art paper and materials, seasonal items and other gifts. Paperchase operates more than 117 retail locations throughout Great Britain, and is in more than 329 Borders stores. The company will continue to convert gifts and stationery departments within Borders stores to Paperchase shops through its store remodeling efforts.

In October 2007, Borders opened its first stand-alone Paperchase shop in the U.S. on Boston’s Newbury Street. A second stand-alone Paperchase shop opened May 2, 2008 in Glendale, Calif.

 

4. Leveraging Innovation, Technology and Strategic Alliances

Borders Group is reinventing the company by leveraging innovation, technology and strategic alliances to differentiate Borders in the marketplace, including debuting a new proprietary e-commerce site in 2008.

Borders.com – Borders launched its own e-commerce site -- Borders.com -- May 27, 2008. The site is rich with innovative features including the Magic Shelf™ and exclusive and original video programming that brings a real bookstore experience to life online. Borders.com also offers Borders Rewards members – which as of June 2008 total more than 26.5 million – an opportunity to earn and redeem their “Borders Bucks” and coupons online. Borders is also introducing Borders.com into its superstores nationwide via existing Borders Search kiosks giving customers the opportunity to enjoy a unique and elevated shopping experience virtually anytime and anywhere.

Strategic Alliances -- Forming strategic alliances with companies with products and services that enrich the customer experience and deliver value is an integral part of Borders’ strategic plan. The following is an overview of those current alliances:

• In March 2003, Borders partnered with T-Mobile to offer customers high-speed wireless Internet access via T-Mobile HotSpot Wi-Fi service. Virtually all Borders U.S. superstores offer T-Mobile HotSpot Wi-Fi, providing customers the opportunity to enhance their in-store experience by indulging in their personal interests in a warm and comfortable setting.

• In September 2007, Borders expanded its existing relationship with Sony to expand the sale of the Sony Reader Digital Book to more than 500 superstores nationwide and launch a co-branded online store for e-book downloads.

• In November 2007, Borders signed an exclusive agreement with Ripple to launch an in-store television network called “Borders TV” in superstores nationwide. Borders TV features Borders’ exclusive, original video content, including “Borders Book Club,” “Live at 01” and “Borders Kitchen” as well as Ripple’s geographically targeted lifestyle content.

• In April 2008 Borders and AARP entered into a long-term agreement to offer unique benefits and discounts to AARP’s more than 39 million members. Under the agreement, Borders and AARP will team up to expand access to information on health, financial security, travel, and other issues important to personal growth and quality of life for those over 50. In addition, Borders will offer AARP members in-store and online discounts on select merchandise and will encourage AARP members to take advantage of the benefits of membership in the Borders Rewards^® customer loyalty program.