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S&P Downgrades Borders Group Shares On Weak Sales

The Associated Press

NEW YORK (AP) — Standard & Poor's Equity Research on Wednesday downgraded shares of bookseller Borders Group Inc. to "Sell" from "Hold" on concerns about the company's weak sales and cash position.

Borders reported Tuesday that its quarterly loss widened on weak sales. While cost-cuts have helped soften the blow to the bottom line, S&P analyst Michael Souers noted that a 13.5 percent same-store sales decline is indicative of struggles book retailers are facing as well as the continued weak macroenvironment.

S&P also raised its target price by $1 to $2.

However, Souers said there are continued concerns about Border's liquidity and longer-term sales prospects.

On Tuesday, Borders reported a wider first-quarter loss due to continued weak sales and more than $70 million in charges. Revenue fell to $650.2 million from $735.8 million a year earlier. The results still beat Wall Street expectations.

Shares of Borders rose 3 cents to close at $2.60 Wednesday.