Borders Group Releases Holiday Sales Results, Company Adjusts Q4 Earnings Guidance; Remains In-Line With Analysts' Consensus.

Business Editors

ANN ARBOR, Mich.--(BUSINESS WIRE)--Jan. 9, 2003

Borders Group, Inc. (NYSE:BGP) today reported sales results for the fourth quarter to date. For the Borders segment, comparable store sales are -2.5%. Waldenbooks comparable store sales are -6.3%. The company's International segment has produced a 31% increase in sales over the same period last year.

Based on these results, which are below original company estimates, management now expects fourth quarter consolidated earnings of approximately $1.36 to $1.41 per share, which compares to the $1.41 to $1.45 per share previously projected. Borders Group anticipates that full year 2002 consolidated earnings per share will range from $1.40 to $1.45 per share, versus the $1.45 to $1.49 per share range management originally estimated.

The adjusted consolidated full year earnings per share range for 2002 represents growth of approximately 8% over consolidated full year earnings for 2001, which were $1.32 per share excluding unusual items.

"We experienced sales strength in certain book categories, DVD, Gifts and Stationery and electronic gift certificate cards -- particularly in the days immediately before and after Christmas -- yet could not overcome the challenging sales environment and will likely fall just short of our original guidance," said Borders Group Chief Executive Officer Greg Josefowicz. "We expected better, yet controlled the business well and remain financially strong. All in all, Borders Group is pleased to have achieved sales and earnings growth over last year."

All projected earnings per share figures above exclude the potential impact of unusual items. Unusual items, which will be assessed by management following the fourth quarter, may include asset impairments primarily of certain under-performing mall stores, as well as potential insurance recoveries related to the loss of the Borders store at the World Trade Center. As previously reported, management projects that the net impact of these items could result in an after-tax charge in the fourth quarter within the range of $3 to $5 million.

Borders Group will issue final fourth quarter and full year sales figures, as well as initial fiscal 2003 guidance, in early February.

About Borders Group, Inc.

Borders Group, Inc., (NYSE:BGP) is a leading global retailer of books, music, video and other information and entertainment items with stores in the United States, United Kingdom, Australia, New Zealand, Singapore, and the commonwealth of Puerto Rico. A FORTUNE 500 company headquartered in Ann Arbor, Mich., Borders Group employs 32,000 worldwide and operates over 400 Borders domestic superstores, 29 international Borders stores, 37 Books etc. locations and approximately 800 Waldenbooks stores. Teamed with Amazon.com, the company also offers online shopping through Borders.com (www.borders.com) and Waldenbooks.com (www.waldenbooks.com).

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. One can identify these forward-looking statements by the use of words such as "projects," "expects," "guidance," "will," "may," "potential," "intends," "anticipates," "estimates" and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address matters such as the company's future financial performance (including sales and earnings guidance).

These statements are subject to risks and uncertainties that could cause actual results and plans to differ materially from those included in the company's forward-looking statements. These risks and uncertainties include, but are not limited to, consumer demand for the company's products, particularly during the holiday season, which is believed to be related to general economic conditions, weather and other factors; asset impairments relating to under-performing stores or other unusual items; an unexpected increase in competition; the timing and amount of insurance recoveries relating to the former Borders store at the World Trade Center; uninsured losses from risks such as terrorism, earthquakes, or floods for which no, or limited, insurance coverage is maintained; higher than anticipated interest costs; energy shortages or higher than anticipated energy costs; unanticipated adverse litigation expenses or results; unanticipated work stoppages or increased labor costs; higher than anticipated merchandise or occupancy costs; the performance of the company's strategic initiatives, including international expansion; the stability and capacity of the company's information systems; and changes in foreign currency exchange rates. Exhibit 99.1 to the company's Form 10-Q Report for the quarter ended October 27, 2002 filed with the Securities and Exchange Commission sets forth a more detailed discussion of these and other risk factors that could cause actual results and plans to differ materially from those included in the forward-looking statements, and that discussion is incorporated herein by reference. The company does not undertake any obligation to update forward-looking statements.