SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10 - Q
(Mark One)

[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended April 23, 2000

                                       OR

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                       For the transition period from to .

                         Commission file number 1-13740

                               Borders Group, Inc.
             (Exact name of registrant as specified in its charter)


                                    MICHIGAN
         (State or other jurisdiction of incorporation or organization)

                                   38-3196915
                                (I.R.S. Employer
                               Identification No.)



                  100 Phoenix Drive, Ann Arbor, Michigan 48108
                    (Address of principal executive offices)
                                   (zip code)

                                 (734) 477-1100
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes X No


             Title of Class                Shares Outstanding As of
             --------------                      May 19, 2000
              Common Stock                       ------------
                                                  78,377,611

<PAGE>

                               BORDERS GROUP, INC.
                                      INDEX


Part I - Financial Information

                                                                    Page

   Item 1.   Financial Statements                                     1

   Item 2.   Management's Discussion and Analysis of
             Financial Condition and Results of
             Operations                                               9

   Item 3.   Quantitative and Qualitative Disclosures about
             Market Risk                                            N/A

Part II - Other information

   Item 1.   Legal Proceedings                                       13

   Item 2.   Changes in Securities and Use of Proceeds              N/A

   Item 3.   Defaults Upon Senior Securities                        N/A

   Item 4.   Submission of Matters to a vote of                     N/A
             Securityholders

   Item 5.   Other Information                                      N/A

   Item 6.   Exhibits and Reports on Form 8-K                        14


Signatures                                                           15


<PAGE>
<TABLE>

                               BORDERS GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in millions except common share data)
                                   (Unaudited)
<CAPTION>


                                                       13 Weeks Ended
                                                  April 23,        April 25,
                                                    2000             1999
                                               ---------------  ---------------
<S>                                            <C>              <C>
Sales                                            $     680.9      $     618.7
Cost of merchandise sold, including
  occupancy costs                                      505.4            457.2
                                               ---------------  ---------------

Gross margin                                           175.5            161.5
Selling, general and administrative
  expenses                                             172.1            162.0
Pre-opening expense                                      1.2              1.4
Goodwill amortization                                    0.9              0.7
                                               ---------------  ---------------

Operating income (loss)                                  1.3             (2.6)
Interest expense                                         2.8              4.1
                                               ---------------  ---------------

Loss before income tax                                  (1.5)            (6.7)
Income tax benefit                                      (0.6)            (2.6)
                                               ---------------  ---------------

Net loss                                         $      (0.9)     $      (4.1)
                                               ===============  ===============

Earnings per common share data --
   Diluted loss per common share                 $      (0.01)    $     (0.05)
                                               ===============  ===============
   Diluted weighted average common shares
   outstanding (in thousands)                          80,158          80,317
                                               ===============  ===============

   Basic loss per common share                   $      (0.01)    $     (0.05)
                                               ===============  ===============
   Basic weighted average common shares
   outstanding (in thousands)                          77,961          77,345
                                               ===============  ===============
</TABLE>
<PAGE>

           See accompanying Notes to Unaudited Condensed Consolidated
                              Financial Statements.

<TABLE>

                               BORDERS GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (Dollars in millions except per common share data)
                                   (Unaudited)
<CAPTION>

                                             April 23,   April 25,  January 23,
                                               2000        1999        2000
                                            ----------  ----------  ----------
<S>                                         <C>         <C>         <C>
                  ASSETS
Current Assets:
  Cash                                      $     74.7  $     49.0  $     41.6
  Merchandise inventories                      1,105.9     1,032.9     1,077.7
  Accounts receivable and other current
    assets                                        64.5        70.6        78.9
                                            ----------  ----------  ----------
      Total Current Assets                     1,245.1     1,152.5     1,198.2
Property and equipment, net of
  accumulated depreciation of $413.9,
  $348.9 and $395.4 at April 23, 2000,
  April 25, 1999 and January 23, 2000,
  respectively                                   548.1       490.6       558.2
Other assets and deferred charges                 35.9        33.6        36.6
Goodwill, net of accumulated amortization
  of $50.4, $46.7 and $49.5 at April 23,
  2000, April 25, 1999 and January 23,
  2000, respectively                             116.7       122.3       121.8
                                            ----------  ----------  ----------
      Total Assets                          $  1,945.8  $  1,799.0  $  1,914.8
                                            ==========  ==========  ==========
   LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Short-term debt and capital lease
    obligations due within one year         $    291.9  $    344.6  $    136.1
  Trade accounts payable                         537.0       474.5       580.4
  Accrued payroll and other liabilities          191.1       180.8       232.2
  Taxes, including income taxes                   36.1        17.0        79.2
                                            ----------  ----------  ----------
      Total Current Liabilities                1,056.1     1,016.9     1,027.9
Long-term debt and capital lease
  obligations                                     15.9         7.0        16.2
Other long-term liabilities                       67.6        63.0        68.1
                                            ----------  ----------  ----------
      Total Liabilities                        1,139.6     1,086.9     1,112.2
                                            ----------  ----------  ----------
Stockholders' Equity:
Common stock; 300,000,000 shares
  authorized; 78,172,779, 77,437,259 and
  77,687,829 issued and outstanding at
  April 23, 2000, April 25, 1999, and
  January 23, 2000, respectively                 684.9       687.2       679.6
Officers receivable and deferred
  compensation                                    (1.3)       (6.9)       (3.9)
Accumulated other comprehensive income            (3.2)       (0.5)        0.2
Retained earnings                                125.8        32.3       126.7
                                            ----------  ----------  ----------
      Total Stockholders' Equity                 806.2       712.1       802.6
                                            ----------  ----------  ----------
      Total Liabilities & Stockholders'
        Equity                              $  1,945.8  $  1,799.0  $  1,914.8
                                            ==========  ==========  ==========
</TABLE>

           See accompanying Notes to Unaudited Condensed Consolidated
                              Financial Statements


<PAGE>
<TABLE>



                               BORDERS GROUP, INC.
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                     FOR THE 13 WEEKS ENDED APRIL 23, 2000
                              (Dollars in millions)
                                   (Unaudited)


<CAPTION>

                                                      Deferred      Accumulated
                                                    Compensation       Other
                                  Common Stock       and Officer   Comprehensive  Retained
                                Shares     Amount    Receivables       Income     Earnings    Total
                              ----------  --------  ------------   -------------  --------   --------

<S>                           <C>         <C>       <C>            <C>            <C>        <C>
Balance at January 23, 2000   77,687,829  $  679.6  $       (3.9)  $         0.2  $  126.7   $  802.6
                              ----------  --------  ------------   -------------  --------   --------

Net loss                              --        --            --              --      (0.9)      (0.9)

Currency translation
  adjustment                          --        --            --            (3.4)       --       (3.4)
                                                                                             --------
Comprehensive income                                                                             (4.3)

Issuance of common
  stock                          492,849       5.4            --              --        --        5.4

Repurchase and retirement
  of common stock                 (7,899)     (0.1)           --              --        --       (0.1)

Change in receivable and
  deferred compensation               --        --           2.6              --        --        2.6
                              ----------  --------  ------------  --------------  --------  ---------

Balance at April 23, 2000     78,172,779  $  684.9  $       (1.3) $         (3.2) $  125.8  $   806.2
                              ==========  ========  ============  ==============  ========  =========

</TABLE>


           See accompanying Notes to Unaudited Condensed Consolidated
                              Financial Statements.



<PAGE>
<TABLE>

                               BORDERS GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Dollars in millions)
                                   (Unaudited)

<CAPTION>
                                                         13 Weeks Ended
                                                     April 23,      April 25,
                                                       2000           1999
                                                   ------------  -------------
<S>                                                <C>           <C>
Cash provided by (used for):
Operations
Net loss                                             $     (0.9)   $     (4.1)
Adjustments  to  reconcile  net loss to  operating
cash flows:
  Depreciation and goodwill amortization                   23.0          20.6
  Change in other long-term assets and liabilities          1.2           2.0
  Cash  provided by (used for) current  assets and
  current liabilities:
   Increase in inventories                                (30.2)        (10.3)
   Decrease in accounts payable                           (42.5)       (132.8)
   Decrease in accrued liabilities                        (40.3)        (41.0)
   Decrease in taxes payable                              (43.3)         (8.8)
   Other, net                                              14.1           0.8
                                                   ------------  -------------
Net cash used for operations                             (118.9)       (173.6)

Investing
Capital expenditures                                      (15.6)        (15.5)
Acquisitions, net of cash acquired                           --         (16.5)
                                                   ------------  -------------
Net cash used for investing                               (15.6)        (32.0)

Financing
Net funding from credit facility                          160.1         210.5
Issuance of common stock                                    5.4           5.6
Repurchase of common stock                                 (0.1)         (5.7)
Other, net                                                  1.9           1.4
                                                   ------------  -------------
Net cash provided by financing                            167.3         211.8
Effect of exchange rates on cash and equivalents            0.3            --
                                                   ------------  -------------
Net increase in cash and equivalents                       33.1           6.2
Cash and equivalents at beginning of year                  41.6          42.8
                                                   ------------  -------------
Cash and equivalents at end of period                $     74.7    $     49.0
                                                   ============  =============
</TABLE>

      See accompanying Notes to Unaudited Condensed Consolidated Financial
                                   Statements.


<PAGE>


                               BORDERS GROUP, INC.
                          NOTES TO UNAUDITED CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS
               (Dollars in millions except per common share data)



NOTE 1 - BASIS OF PRESENTATION

     The accompanying  unaudited condensed  consolidated financial statements of
Borders  Group,  Inc. (the  Company) have been prepared in accordance  with Rule
10-01  of  Regulation  S-X and do not  include  all the  information  and  notes
required by generally  accepted  accounting  principles  for complete  financial
statements.  All adjustments,  consisting only of normal recurring  adjustments,
have been made which,  in the opinion of  management,  are  necessary for a fair
presentation  of the results of the interim  periods.  The results of operations
for such interim periods are not necessarily indicative of results of operations
for a full year.  The  unaudited  condensed  consolidated  financial  statements
should  be  read  in  conjunction  with  the  Company's  consolidated  financial
statements and notes thereto for the fiscal year ended January 23, 2000.

     The Company's fiscal year ends on the Sunday immediately preceding the last
Wednesday in January.  At April 23, 2000, the Company  operated 309  superstores
under the Borders name,  including eight in the United Kingdom,  and one each in
Singapore,  Australia and New Zealand.  The Company also operated 887 mall-based
and other  bookstores  primarily under the  Waldenbooks  name, and 28 bookstores
under the Books etc.  name in the  United  Kingdom.  The  Company,  through  its
subsidiary Borders Online,  Inc., is also an online retailer of books, music and
video through the operation of its Internet commerce site, Borders.com.

NOTE 2 - COMMITMENTS AND CONTINGENCIES

     During  1994,  the Company  entered  into  agreements  in which leases with
respect to four  Borders'  locations  serve as collateral  for certain  mortgage
pass-through  certificates.  The mortgage  pass-through  certificates  include a
provision  requiring the Company to repurchase the underlying  mortgage notes in
certain  events,  including  the failure by the Company to make payments of rent
under the related leases, the failure by Kmart Corporation (the former parent of
the Company) to maintain required investment grade ratings or the termination of
the guarantee by Kmart of the  Company's  obligations  under the related  leases
(which would  require  mutual  consent of Kmart and  Borders).  In the event the
Company is required to repurchase  all of the  underlying  mortgage  notes,  the
Company would be obligated to pay approximately $36.6 million. The Company would
expect to fund this obligation through its Credit Facility.

     In  March  1998,  the  American  Booksellers  Association  ("ABA")  and  26
independent  bookstores  filed a lawsuit in the United States District Court for
the Northern District of California against the Company and Barnes & Noble, Inc.
alleging  violations of the  Robinson-Patman  Act, the  California  Unfair Trade
Practice Act and the  California  Unfair  Competition  Act. The Complaint  seeks
injunctive  and  declaratory  relief;  treble  damages  on behalf of each of the
bookstore plaintiffs,  and, with respect to the California bookstore plaintiffs,
any other damages permitted by California law;  disgorgement of money,  property
and gains  wrongfully  obtained  in  connection  with the  purchase of books for
resale,  or offered  for  resale,  in  California  from March 18, 1994 until the
action is  completed  and  prejudgement  interest on any amounts  awarded in the
action,  as well as attorney fees and costs. The trial is scheduled for April 9,
2001. The Company intends to vigorously defend the action.


<PAGE>


                               BORDERS GROUP, INC.
                          NOTES TO UNAUDITED CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS
               (Dollars in millions except per common share data)



     In August 1998, The Intimate  Bookshop,  Inc.  ("Intimate")  and its owner,
Wallace  Kuralt,  filed a lawsuit in the United  States  District  Court for the
Southern  District of New York against the Company,  Barnes & Noble,  Inc.,  and
others alleging violation of the Robinson-Patman Act and other federal laws, New
York  statutes  governing  trade  practices  and  common  law.  In  response  to
Defendants'  Motion to Dismiss the  Complaint,  plaintiff  Kuralt  withdrew  his
claims and plaintiff Intimate voluntarily  dismissed all but its Robinson-Patman
claims.   Intimate   recently  filed  a  Second  Amended  Complaint  limited  to
allegations  of  violation  of  the  Robinson-Patman  act.  The  Second  Amended
Complaint  alleges  that  Intimate  has  suffered  $11.3 or more in damages  and
requests treble damages,  injunctive and declaratory  relief,  interest,  costs,
attorneys  fees and other  unspecified  relief.  Many of the  allegations in the
Second Amended Complaint are similar to those contained in the action instituted
by the ABA and 26 bookseller  plaintiffs against the Company and Barnes & Noble,
Inc. in March, 1998. The Company intends to vigorously defend the action.

     In April  2000,  two  former  employees,  individually  and on  behalf of a
purported  class,  filed an action  against  Borders  in the  Superior  Court of
California for the County of San Francisco.  The purported class consists of all
current and former  store  management  employees of Borders in  California  who,
within the applicable  statutes of limitations,  were denied payment of overtime
compensation  in violation of  California  law. The  Complaint  alleges that the
individual  plaintiffs  and the purported  class members  worked hours for which
they were entitled to receive, but did not receive,  overtime compensation under
California  law,  and that they were  classified  as "exempt"  store  management
employees  but were  forced to work more  than 50% of their  time in  non-exempt
tasks.  The Complaint  alleges  violations  of the  California  Labor Code,  the
California  Business and  Professions  Code and  conversion.  The relief  sought
includes compensatory and punitive damages, penalties, preliminary and permanent
injunctions  requiring  Borders to pay overtime  compensation  as required under
California and Federal law, prejudgment interest, costs, attorneys fees and such
other relief as the Court deems proper. The Company intends to vigorously defend
the action.

     On May 31, 2000, Keith Markowitz  instituted an action in the United States
District Court for the Eastern  District of  Pennsylvania  as a purported  class
action against Sony Music  Entertainment Inc. ("Sony"),  Warner-Elektra-Atlantic
Corporation  ("WEA"),  EMI  Music  Distribution   ("EMI"),  BMG  Music  ("BMG"),
Universal Music & Video Corp. ("UMVD"),  Wal Mart Stores, Inc., ("Wal Mart") and
Borders, Inc., ("Borders", a subsidiary of the Company). The purported Plaintiff
Class is composed of all similarly  situated  purchasers  who since May 31, 1996
(the "Class Period")  purchased  compact discs of prerecorded  music distributed
and/ or manufactured by defendants. Wal Mart and Borders are named as defendants
individually and as representatives of a purported Defendant Class consisting of
all retailers  and other  distributors  of compact discs  produced by defendants
Sony,  WEA, EMI, BMG, and UMVD during the Class Period,  and who conspired  with
Sony,  WEA, EMI, BMG,  and/or UMVD to carry out the unlawful  conduct alleged in
the complaint. The complaint alleges that Sony, WEA, EMI, BMG, and UMVD each had
agreements with retailers setting out minimum  advertised price policies and the
benefits  conferred  on retailers  for  adhering to such  policy,  and that such
agreements  amounted to  vertical  agreements  in  restraint  of trade  fixing a
minimum  price for  prerecorded  music  products,  including  CDs. The complaint
further alleges that the alleged  agreements  violated of the Sherman Anti-Trust
Act and caused the plaintiffs to pay  supra-competitive  prices for the CDs they
purchased.  Plaintiffs seek a permanent injunction,  treble damages,  attorneys'
fees, costs and  disbursements,  pre- and post-judgment  interest and such other
relief as the court may deem as  appropriate.  Borders denies the allegations of
wrongdoing and intends to vigorously defend this litigation.

     The Company has not included any liability in its  financial  statements in
connection  with the lawsuits  described  above and has expensed as incurred all
costs to date.
<PAGE>


                               BORDERS GROUP, INC.
                          NOTES TO UNAUDITED CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS
               (Dollars in millions except per common share data)


     In  addition to the matters  described  above,  the Company is from time to
time  involved in or affected by other  litigation  incidental to the conduct of
its businesses. The Company does not believe that any such other litigation will
have a material adverse effect on its liquidity,  financial  position or results
of operations.

NOTE 3 - FINANCING

     Credit Facility:  The Company has a $472.8  multicurrency  credit agreement
(the Credit  Facility)  which  expires in October,  2002.  Borrowings  under the
Credit  Facility bear interest at a base rate or an increment  over LIBOR at the
Company's option. The Credit Facility contains  operating  covenants which limit
the  Company's  ability to incur  indebtedness,  make  acquisitions,  dispose of
assets,  issue or repurchase  its common stock in excess of $100.0 million (plus
any proceeds  and tax benefits  resulting  from stock option  exercises  and tax
benefits  resulting  from  restricted  shares  purchased by  employees  from the
Company),  and require the Company to meet certain financial  measures regarding
fixed  charge  coverage,  leverage  and  tangible  net  worth.  The  Company  is
prohibited  under the Credit  Facility  from  paying  cash  dividends  on common
shares.  The Company had  borrowings  outstanding  under the Credit  Facility of
$289.6 as of April 23, 2000 and $133.4 as of January 23, 2000.

     Seasonal Facility: The Company has a $25.0 multicurrency seasonal revolving
credit facility (the Seasonal Facility) which expires in July, 2000.  Borrowings
under the Seasonal  Facility bear  interest at a base rate or an increment  over
LIBOR at the Company's  option.  The Seasonal  Facility  contains  covenants and
events of default  that are similar to those  contained  in the Credit  Facility
described  above. The Company had no borrowings  outstanding  under the Seasonal
Facility as of April 23, 2000 and January 23, 2000.

     Lease Financing Facility: The Company has a $175.0 lease financing facility
(the Lease Facility) to finance new stores and other property through  operating
leases, which expires in October, 2002. The Lease Facility provides financing to
lessors  through  loans from a third  party  lender for up to 95% of a project's
cost. It is expected that Lessors will make equity  contributions  approximating
5% of each project.  Independent of its obligations as lessee,  the Company will
guarantee payment when due of all amounts required to be paid to the third party
lender.  The principal amount  guaranteed is limited to approximately 89% of the
original  cost of a project so long as the  Company is not in default  under the
lease relating to such project. The Lease Facility contains covenants and events
of default that are similar to those contained in the Credit Facility  described
above.  There was $165.9  outstanding  under the Lease  Facility as of April 23,
2000 and $162.9 as of January 23, 2000.



<PAGE>


                               BORDERS GROUP, INC.
                          NOTES TO UNAUDITED CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS
               (Dollars in millions except per common share data)



NOTE 4 - SEGMENT INFORMATION

     The  Company is  organized  based upon the  following  operating  segments:
domestic Borders stores,  international  Borders and Books etc.  stores,  Walden
stores, online retailing through Borders.com,  and other (consisting of interest
expense and certain corporate governance costs).

     Segment data includes charges  allocating  certain  corporate  headquarters
costs to each segment.  Transactions between segments, consisting principally of
inventory  transfers,  are recorded primarily at cost. The Company evaluates the
performance of its segments and allocates resources to them based on anticipated
future contribution.


                                    13 Weeks Ended
                                 April 23,   April 25,
                                   2000        1999
                                ----------  ----------
Sales:
    Borders                       $  447.0    $  392.0
    Walden                           185.3       188.5
    International                     43.3        35.0
                                ----------  ----------
       Total stores                  675.6       615.5
    Borders.com                        5.3         3.2
                                ----------  ----------
                                  $  680.9    $  618.7
                                ==========  ==========

Net income (loss):
    Borders                       $    8.3    $    5.1
    Walden                            (0.3)        3.1
    International                     (3.5)       (2.4)
    Other                             (0.8)       (5.6)
                                ----------  ----------
       Total stores                    3.7         0.2
    Borders.com                       (4.6)       (4.3)
                                ----------  ----------
                                  $   (0.9)   $   (4.1)
                                ==========  ==========

                                 April 23,   April 25,
                                   2000        1999
                                ----------  ----------
Total assets:
    Borders                       $1,158.6    $1,062.5
    Walden                           426.6       441.6
    International                    200.5       164.0
    Other                            104.1        80.6
                                ----------  ----------
       Total stores                1,889.8     1,748.7
    Borders.com                       56.0        50.3
                                ----------  ----------
                                  $1,945.8    $1,799.0
                                ==========  ==========
<PAGE>

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
         RESULTS OF OPERATIONS

General

     The Company,  through its  subsidiaries,  is the second largest operator of
book and music superstores and the largest operator of mall-based  bookstores in
the world  based upon both sales and number of stores.  At April 23,  2000,  the
Company operated 309 superstores under the Borders name,  including eight in the
United  Kingdom,  and one each in  Singapore,  Australia  and New  Zealand.  The
Company also operated 887 mall-based and other  bookstores  primarily  under the
Waldenbooks  name,  and 28  bookstores  under the Books etc.  name in the United
Kingdom.  The Company,  through its subsidiary Borders Online,  Inc., is also an
online retailer of books,  music and video through the operation of its Internet
commerce site, Borders.com.

     The  Company's  first  quarters of 2000 and 1999  consisted of the 13 weeks
ended April 23, 2000 and April 25, 1999, respectively.

Results of Operations

     The following table presents the Company's statement of operations data, as
a percentage of sales,  for the periods  indicated.  Data for the 13 weeks ended
April 25, 1999 excludes a one-time  charge ($5.5 million  pre-tax,  $3.4 million
net-of-tax) related to the departure of a former executive of the Company.
<TABLE>
<CAPTION>
                                          13 Weeks Ended
                                      April 23,   April 25,
                                         2000       1999
                                      ---------   ---------

<S>                                   <C>         <C>
Sales                                    100.0%      100.0%
Cost of merchandise sold, including
  occupancy costs                         74.2        73.9
                                      ---------   ---------
Gross margin                              25.8        26.1
Selling, general and administrative
  expenses                                25.3        25.3
Pre-opening expense                        0.2         0.2
Goodwill amortization                      0.1         0.1
                                      ---------   ---------
Operating income                           0.2         0.5
Interest expense                           0.4         0.7
                                      ---------   ---------
Loss before income taxes                  (0.2)       (0.2)
Income tax benefit                        (0.1)       (0.1)
                                      ==========  =========
Net loss                                  (0.1)%      (0.1)%
                                      ==========  =========
</TABLE>


<PAGE>


Store Activity

The Company's store activity is summarized below:
<TABLE>
<CAPTION>

                                                 Year
                          13 Weeks Ended         Ended
                        April 23,  April 25,   January 23,
                          2000       1999         2000
                        ---------  ---------   ----------
<S>                     <C>        <C>         <C>
BORDERS SUPERSTORES
Beginning number of
 stores                      300        250          250
Openings                       9         12           50
                        ---------  ---------   ----------
Ending number of stores      309        262          300
                        =========  =========   ==========


WALDEN MALL BOOKSTORES
Beginning number of
 stores                      904        900          900
Openings                      --          8           39
Closings                     (17)       (22)         (35)
                        ---------  ---------   ----------
Ending number of stores      887        886          904
                        =========  =========   ==========
</TABLE>



13 Weeks Ended April 23, 2000 and April 25, 1999

     Store  sales in the first  quarter  of 2000 were  $675.6  million,  a $60.1
million,  or 9.8%,  increase  over first  quarter 1999 sales of $615.5  million.
Borders  domestic  superstore  sales  increased  $55.0  million,  or 14.0%,  due
primarily to new store openings.  Borders  comparable store sales increased 2.3%
during the quarter.  Walden sales decreased $3.2 million due to the fewer number
of stores and a  comparable  store  sales  decrease of 3.0%.  Borders.com  sales
increased  65.6% to $5.3  million  versus $3.2  million for the same period last
year.

     Gross margin as a percentage of sales was 25.8% in 2000 versus 26.1% in the
first quarter of 1999. The decrease  primarily  reflects the loss of leverage on
occupancy costs due to lower sales for Walden.

     As a percentage  of sales,  SG&A expense  (excluding  one-time  charge) was
25.3% in the first quarter of 2000 and 1999.

     Pre-opening  expense in the first  quarter of 2000 was $1.2 million  versus
$1.4  million  from  the  same  period  in 1999.  Pre-opening  expense  consists
principally of  grand-opening  advertising  expense and store payroll related to
the opening,  and is expensed as incurred.  Pre-opening expense per store varies
primarily  as a  result  of  differing  levels  of  grand  opening  advertising,
depending on the presence of the Company and its  competitors  in the market and
differing  levels of labor costs  associated with  merchandising  the store. The
Company opened 9 Borders  superstores  and did not open any Walden stores in the
first quarter of 2000 as compared to 12 Borders  superstores and 8 Walden stores
in the first quarter of 1999.

     Goodwill  amortization was $0.9 million in the first quarter of 2000 versus
$0.7  million  from  the  first  quarter  of  1999.  The  increase  in  goodwill
amortization is due to the acquisition of All Wound Up.
<PAGE>

     Interest  expense was $2.8 million in the first quarter of 2000 as compared
to $4.1 million in 1999.  The decrease of $1.3 million is primarily due to lower
debt levels during the quarter versus a year ago.

     Income tax  benefit in the first  quarter of 2000 was $0.6  million  versus
$0.5 million in 1999 (excluding $2.1 million for one-time charge).

Liquidity and Capital Resources

     The Company's  principal  capital  requirements are to fund working capital
needs, the opening of new stores,  the  refurbishment  and expansion of existing
stores and continued development of Borders.com.

     Net cash used for  operations  for the 13 weeks  ended  April 23,  2000 was
$118.9 million as compared to $173.6 million in the corresponding  period in the
prior year. Cash from  operations for the period  primarily  reflects  operating
results net of non-cash  depreciation and amortization  expense.  Operating cash
outflows for the period were  primarily the result of inventory  purchases,  and
decreases in accounts payable,  taxes payable and accrued liabilities during the
period.

     Net  cash  used for  investing  for the  first  13 weeks of 2000 was  $15.6
million  as  compared  to $32.0  million  in the  first  13  weeks of 1999,  and
primarily represents capital expenditures for new stores.

     Net cash  provided  by  financing  in the first 13 weeks of 2000 was $167.3
million  versus $211.8  million in the first 13 weeks of 1999. Net cash provided
by financing resulted primarily from net borrowings under the credit facility.

     On a consolidated  basis,  the Company expects its capital  requirements to
increase as a result of its expansion program for its Borders  superstores (both
domestic and international) and continued development of Borders.com.

     The  Company  has a  $472.8  multicurrency  credit  agreement  (the  Credit
Facility) which expires in October,  2002.  Borrowings under the Credit Facility
bear interest at a base rate or an increment over LIBOR at the Company's option.
The Credit  Facility  contains  operating  covenants  which limit the  Company's
ability to incur indebtedness,  make acquisitions,  dispose of assets,  issue or
repurchase  its common stock in excess of $100.0  million (plus any proceeds and
tax benefits  resulting from stock option  exercises and tax benefits  resulting
from restricted shares purchased by employees from the Company), and require the
Company to meet certain  financial  measures  regarding  fixed charge  coverage,
leverage  and  tangible net worth.  The Company is  prohibited  under the Credit
Facility from paying cash dividends on common shares. The Company had borrowings
outstanding  under the Credit Facility of $289.6 as of April 23, 2000 and $133.4
as of January 23, 2000.

     The Company has a $25.0  multicurrency  seasonal  revolving credit facility
(the  Seasonal  Facility)  which  expires in July,  2000.  Borrowings  under the
Seasonal Facility bear interest at a base rate or an increment over LIBOR at the
Company's option. The Seasonal Facility contains covenants and events of default
that are similar to those contained in the Credit Facility  described above. The
Company had no borrowings  outstanding  under the Seasonal  Facility as of April
23, 2000 and January 23, 2000.

     The Company has a $175.0 lease  financing  facility (the Lease Facility) to
finance new stores and other property through operating leases, which expires in
October,  2002. The Lease Facility  provides  financing to lessors through loans
from a third party lender for up to 95% of a project's cost. It is expected that
Lessors  will  make  equity  contributions  approximating  5% of  each  project.
Independent  of its  obligations as lessee,  the Company will guarantee  payment
when due of all  amounts  required  to be paid to the third  party  lender.  The
principal amount guaranteed is limited to approximately 89% of the original cost
of a project so long as the Company is not in default  under the lease  relating
to such project.  The Lease  Facility  contains  covenants and events of default
that are similar to those contained in the Credit Facility described above.
<PAGE>

     There were 42 and 41 properties financed through the Lease Facility, with a
financed  value of $165.9 and $162.9  million,  as of April 23, 2000 and January
23,  2000,  respectively.  Management  believes  that the  rental  payments  for
properties financed through the lease facility may be lower than those which the
Company  could  obtain  elsewhere  due to,  among other  factors,  (i) the lower
borrowing  rates available to the Company's  landlords  under the facility,  and
(ii) the fact the rental payments for properties  financed  through the facility
do  not  include  amortization  of  the  principal  amounts  of  the  landlords'
indebtedness  related  to the  properties.  Rental  payments  relating  to  such
properties will be adjusted when permanent  financing is obtained to reflect the
interest rates available at the time of the refinancing and the  amortization of
principal.

     During  1994,  the Company  entered  into  agreements  in which leases with
respect to four  Borders'  locations  serve as collateral  for certain  mortgage
pass-through  certificates.  The mortgage  pass-through  certificates  include a
provision  requiring the Company to repurchase the underlying  mortgage notes in
certain  events,  including  the failure by the Company to make payments of rent
under the related leases, the failure by Kmart Corporation (the former parent of
the Company) to maintain required investment grade ratings or the termination of
the guarantee by Kmart of the  Company's  obligations  under the related  leases
(which would  require  mutual  consent of Kmart and  Borders).  In the event the
Company is required to repurchase  all of the  underlying  mortgage  notes,  the
Company would be obligated to pay approximately $36.6 million. The Company would
expect to fund this obligation through its Credit Facility.

     The  Company  currently  has a  share  repurchase  program  in  place  with
remaining authorization to repurchase  approximately $66.9 million of its common
stock as of April 23,  2000.  During  the 13 weeks  ended  April 23,  2000,  the
Company repurchased $0.1 million of its common stock.


OTHER MATTERS

     STRATEGIC ALTERNATIVES

     During the first quarter,  the Board of Directors authorized the Company to
explore strategic  alternatives in order to increase  shareholder  value.  These
alternatives could include a recapitalization, a leveraged buyout, or a business
combination  with  another  company;  however,  there is no  assurance  that any
transaction will occur.

     YEAR 2000 ISSUE

     The Company has  experienced  no  significant  disruptions to operations of
business  systems to date as a result of the  transition  form 1999 to 2000. The
Company does not expect any material subsequent  disruption to its operations or
business systems from this transition.

     FORWARD-LOOKING STATEMENTS

     This Quarterly Report on Form 10-Q contains  forward-looking  statements as
defined in the Private Securities Litigation Reform Act of 1995. Forward-looking
statements  reflect   management's   current  expectations  and  are  inherently
uncertain.   The  Company's  actual  results  may  differ   significantly   from
management's  expectations.  Exhibit 99.1 to this report,  "Cautionary Statement
under the Private  Securities  Litigation  Reform Act of 1995",  identifies  the
forward-looking  statements and describes some, but not all, of the factors that
could cause these differences.
<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

     The Company's Form 10-K Annual Report for the fiscal year ended January 23,
2000 describes three pending lawsuits  against the Company.  An adverse judgment
against the Company in any of these matters could have a material adverse effect
on the Company.  There have not been any material  developments in these matters
during the fiscal quarter covered by this Report.

     On May 31, 2000, Keith Markowitz  instituted an action in the United States
District Court for the Eastern  District of  Pennsylvania  as a purported  class
action against Sony Music  Entertainment Inc. ("Sony"),  Warner-Elektra-Atlantic
Corporation  ("WEA"),  EMI  Music  Distribution   ("EMI"),  BMG  Music  ("BMG"),
Universal Music & Video Corp. ("UMVD"),  Wal Mart Stores, Inc., ("Wal Mart") and
Borders, Inc., ("Borders", a subsidiary of the Company). The purported Plaintiff
Class is composed of all similarly  situated  purchasers  who since May 31, 1996
(the "Class Period")  purchased  compact discs of prerecorded  music distributed
and/ or manufactured by defendants. Wal Mart and Borders are named as defendants
individually and as representatives of a purported Defendant Class consisting of
all retailers  and other  distributors  of compact discs  produced by defendants
Sony,  WEA, EMI, BMG, and UMVD during the Class Period,  and who conspired  with
Sony,  WEA, EMI, BMG,  and/or UMVD to carry out the unlawful  conduct alleged in
the complaint. The complaint alleges that Sony, WEA, EMI, BMG, and UMVD each had
agreements with retailers setting out minimum  advertised price policies and the
benefits  conferred  on retailers  for  adhering to such  policy,  and that such
agreements  amounted to  vertical  agreements  in  restraint  of trade  fixing a
minimum  price for  prerecorded  music  products,  including  CDs. The complaint
further alleges that the alleged  agreements  violated of the Sherman Anti-Trust
Act and caused the plaintiffs to pay  supra-competitive  prices for the CDs they
purchased.  Plaintiffs seek a permanent injunction,  treble damages,  attorneys'
fees, costs and  disbursements,  pre- and post-judgment  interest and such other
relief as the court may deem as  appropriate.  Borders denies the allegations of
wrongdoing and intends to vigorously defend this litigation.

     In  addition to the matters  described  above,  the Company is from time to
time  involved in or affected by other  litigation  incidental to the conduct of
its businesses. The Company does not believe that any such other litigation will
have a material adverse effect on its liquidity,  financial  position or results
of operations.

<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits:

(a)   Exhibits:


      27.0  Financial Data Schedule.

      99.1  Cautionary Statement under the Private Securities  Litigation Reform
            Act of 1995 - "Safe Harbor" for Forward-Looking Statements.

(b)   Reports on Form 8-K:

      During the 13 week period  ended April 23,  2000,  one report was filed on
      Form 8-K under Item 5 - Other  Events.  This report stated the Company had
      retained the investment  banking firm of Merrill Lynch & Co., Inc. for the
      purpose of exploring  strategic  options for the Company.  This report was
      dated and filed on March 3, 2000.




<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereto duly authorized.

                               BORDERS GROUP, INC.
                                  (Registrant)




Date: June 7, 2000                       By:       /s/
                                              --------------------
                                              Kenneth E. Scheve
                                              Senior Vice President, Chief
                                              Financial Officer and Treasurer
                                              (Principal Financial and
                                              Accounting Officer)