Major Music Floorspace Reductions at Borders

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Borders is drastically reducing music floorspace, a response to softening demand for CDs.

On Monday, the company disclosed a tepid quarterly sales report, one that included both revenue and profit drops.  Specifically, for the fiscal third quarter ending November 1st, losses topped $175.4 million, broader than year-ago losses of $161.1 million.  Revenues topped $693.4 million, down 10.4 percent from year-ago sales of $765.2 million.

Despite those losses, the company reduced debt and shaved expenses, partly based on inventory reductions on lower-performing items.  But broader consumer issues are buffeting Borders, just like other retailers.  “We experienced the same problems as almost every other retailer as our negative comps were primarily a traffic issue and the traffic drop was especially pronounced in September and October,” saidBorders Group chief executive George Jones.

And music?  The reductions are nothing less than aggressive.  “We have reduced floorspace dedicated to music in all of our stores by about a third on average,” Jones continued.  “Music now occupies about 7 percent of our total floorspace. The space previously occupied by music was reallocated to growth categories such as children’s books and bargain books.”