Michigan-based book retailer Borders Group has released the results for its third quarter ended October 30, 2010 as well as pertinent steps in its brand transformation process.

While sales for the quarter dropped by 17.6% to US$470.9 million, the Digital and Kids Toys and Games categories outperformed all other categories, with Digital comparable store sales almost doubling, and Kids Toys and Games comparable store sales increasing 6.6% for the quarter.

The company’s kids section has been expanded in 51 locations to drive further sales growth in the Kids Toys and Games category, which is now outpacing most other areas of the business. Given the findings of extensive consumer research conducted earlier this year, the company is moving into a new phase of its brand transformation process and will begin piloting a slew of services in the hopes of differentiating itself from other booksellers in the Washington D.C. and New York City markets. The pilot stores will include an appointed destination for kids and their families with more educational toys and games, children’s educational and enrichment programs provided in partnership with an education provider as well as an expanded selection of eReaders and other electronic devices.

The brand transformation efforts are being made to combat dipping sales, which were negatively impacted by the closing of 204 bookstores between the end of the third quarter of 2009 and the end of the third quarter of 2010.

Borders.com sales decreased 8.6% over the prior year to US$12.5 million. The company has made improvements to its e-commerce platform during the quarter and added a number of services in preparation for the fourth quarter. More than 580,000 customers have signed up for the company’s new Borders Rewards Plus program, which launched on September 1, generating more than US$11 million in membership revenue. The company has found that its Rewards Plus members shop more frequently and have a higher than average ticket driven by significantly higher units per transaction.