In the second quarter ended August 2, sales at Borders Group fell 6.9% to $758.5 million and the net loss was $9.2 million compared to a net loss of $25.1 million in the same period a year ago.

Despite the major sales drop, Wall Street liked the news about the reduction of the net loss: in after-hours trading, Borders stock rose 7.3% to $5.75 a share, the Wall Street Journal reported.

The company said that it had improved operating cash flow by nearly $200 million, mainly because of tighter management of inventory and other working capital, and reduced debt by about 37%, mainly because of improved management of inventory and other working capital, lower capital expenditures and proceeds from the sale earlier this year of its Australia/New Zealand/Singapore businesses.

Sales at U.S. superstores open at least a year fell by 8.9%. Excluding Harry Potter sales in the second quarter of last year, comp-store sales would have dropped 5.1% and book sales would have declined 2.5%. Bestselling titles included Breaking Dawn, The Last Lecture, The Shack, Audition and When You Are Engulfed in Flames, and the categories that performed well included bargain and children's. Borders opened four superstores in the U.S. during the quarter and now has 518.

Borders's new online site had sales of $7.4 million, and sales at Waldenbook specialty retail stores open at least a year fell 7%, but only 1.4% with sales of Harry Potter excluded.

Following the sale of stores in the U.K., Ireland, Australia, New Zealand and Singapore, Borders's international business mainly consists of Paperchase, which has headquarters in London, three Borders stores in Puerto Rico and the franchise operations in the U.A.E. and Malaysia.