Problems this side of the Pond have dragged down the profits of US bookseller Borders.

The firm has posted an 84 per cent drop in quarterly profit as strong sales of the latest Harry Potter novel failed to offset weak demand in the UK and costly store remodels.

The US bookseller, which owns a flagship store in Birmingham's Bullring, also forecast a largerthanexpected third-quarter loss and pegged its full-year profit below average estimates by analysts.

Second-quarter net income fell to $1.3 million (£719,000) from $7.9 million (£4.37 million) a year ago.

The company said the results included an after-tax charge related to store remodels.

Borders chief financial officer Ed Wilhelm said the remodels would pay off by allowing the company to expand more profitable categories such as cafes, gifts and stationery, while reducing declining ones like music.

He added the bookseller would have 100 stores remodelled in time for the critical holiday shopping season in the run up to Christmas when the company generates its biggest portion of annual sales.

Total sales rose 5.3 per cent to $891.6 million (£493 million) as the release of Harry Potter and the Half-Blood Prince helped boost business at Borders and Waldenbooks stores.

But sagging same-store sales in the UK, the remodelling of Borders superstores and the conversion of Waldenbooks outlets to Borders Express locations hurt profits.

Same-store sales increased 1.8 per cent at Borders and rose 1.9 per cent within the Waldenbooks retail division.