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 27, 1997

                                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)

           DELAWARE                    38-3196915
 (State or other jurisdiction       (I.R.S. Employer
      of incorporation or            Identification
         organization)                      No.)

       500 East Washington Street, Ann Arbor, Michigan 48104
             (Address of principal executive offices)
                            (zip code)

                          (313) 913-1100
       (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
         Common Stock                 June 6, 1997
       ($.001 par value)               76,240,188
                                       ----------










<PAGE>


BORDERS GROUP, INC.



                               INDEX



Part I - Financial Information

                                                          Page

   Item 1. Financial Statements                             1

   Item 2. Management's Discussions and Analysis of
           Financial Condition and Results of
           Operations                                       7

Part II - Other information

   Item 1. Legal Proceedings                              N/A

   Item 2. Changes in Securities                          N/A

   Item 3. Defaults Upon Senior Securities                N/A

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

   Item 5. Other Information                              N/A

   Item 6. Exhibits and Reports on Form 8-K                11


Signatures


<PAGE>


                        BORDERS GROUP, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        (Dollars in millions except per common share data)
                            (Unaudited)
                                              13 Weeks Ended
                                       April 27,         April 28,
                                         1997              1996
                                     -------------   -----------------

Sales                                    $  463.6            $  404.0
Cost of merchandise sold,
 including occupancy costs                  350.8               310.8
                                     -------------   -----------------

Gross profit                                112.8                93.2
Selling, general and
administrative expenses                     110.4                96.2
Pre-opening expense                           0.3                 0.4
Goodwill amortization                         0.3                 0.3
                                     -------------   -----------------

Operating income (loss)                       1.8               (3.7)
Interest expense                              1.0                1.9
                                     -------------   -----------------

Income (loss) before income tax               0.8               (5.6)
Income tax expense (benefit)                  0.4               (2.2)
                                     -------------   -----------------

Net income (loss)                          $  0.4            $  (3.4)
                                     =============   =================


Income (loss) per common share
data
Income (loss) per common share            $  0.00            $ (0.04)
                                     =============   =================

Weighted average common shares
outstanding (in thousands)                 81,868              81,834
                                     =============   =================
    See accompanying Notes to Unaudited Condensed Consolidated
                       Financial Statements.




<PAGE>


                        BORDERS GROUP, INC.
               CONDENSED CONSOLIDATED BALANCE SHEETS
        (Dollars in millions except per common share data)
                            (Unaudited)
                                       4/27/97     4/28/96     1/26/97
Assets
Current Assets

Cash                                  $   33.2     $  51.6     $  42.6
Merchandise inventories                  750.6       651.2       737.5
Accounts    receivable   and   other
current assets                            49.4        56.5        66.3
                                     ----------  ---------- -----------
Total current assets                     833.2       759.3       846.4
Property and equipment, net of
accumulated depreciation of $247.7,      291.0       253.9       289.2
$217.7 and $235.1, respectively
Other assets and deferred charges         36.8        26.7        36.9
Goodwill, net of accumulated
amortization of $41.8, $40.7, and         38.2        39.3        38.5
$41.5, respectively (Note 3)
                                     ----------  ---------- -----------

                                     $ 1,199.2    $1,079.2  $  1,211.0
                                     ==========  ========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt and capital lease
obligations due within one year        $  80.5    $  125.6     $  30.5
Trade accounts payable                   351.0       303.0       350.0
Accrued payroll and other                174.6       137.4       197.8
liabilities
Taxes, including income taxes             17.0         4.2        56.1
                                     ----------  ---------- -----------
Total Current Liabilities                623.1       570.2       634.4
Long-term debt and capital lease
obligations                                5.9         9.2         6.2
Other long-term liabilities               24.4        28.7        24.8
Commitments and contingencies (Note 5)     --          --          --
                                     ----------  ---------- -----------
Total Liabilities                        653.4       608.1       665.4
                                     ----------  ---------- -----------
Shares subject to repurchase              34.1          --        34.1
                                     ----------  ---------- -----------
Preferred Stock, par value $.001 per
share; 8,900,000 shares authorized;         --          --          --
no shares issued and outstanding
Common  stock,  par value  $.001 per
share;                                     0.1          --         0.1
200,000,000 shares authorized;
76,018,954,      75,507,888      and
75,858,016
issued and  outstanding at April 27,
1997,  April 28,  1996,  and January
26, 1997, respectively

Additional paid-in capital               648.2       669.9       648.0
Officers receivable and deferred
compensation                             (1.1)       (1.6)       (0.8)
Accumulated deficit                    (135.5)     (197.2)     (135.9)
                                     ----------  ---------- -----------
Total stockholders' equity               511.7       471.1       511.4
                                     ----------  ---------- -----------
                                     $ 1,199.2  $  1,079.2 $   1,210.9
                                     ==========  ========== ===========

    See accompanying Notes to Unaudited Condensed Consolidated
                       Financial Statements


<PAGE>


                        BORDERS GROUP, INC.
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
               FOR THE 13 WEEKS ENDED APRIL 27, 1997
                       (Dollars in millions)
                            (Unaudited)

                     Common Stock              Add'l              Total
                       Shares        Officers Paid-in   Retained
                       Amount        Rec.      Capital  Earnings
                                     Deferred           (Deficit)
                                       Comp


Balance at 1/26/97 75,858,016 $0.1   $(0.8)   $648.0    $(135.9) $ 511.4
Net income               --     --       --        --      0.4       0.4
Issuance of common
stock               494,210     --    (0.5)       6.1       --       5.6
Repurchase of
common             (333,272)    --       --     (5.9)       --     (5.9)
stock and
retirement
Payment of
receivable               --     --      0.2        --       --       0.2
and deferred
compensation
                   ---------  -----  -------  --------  ------- ---------

Balance at 4/27/97 76,018,954 $0.1   $(1.1)   $ 648.2   $(135.5) $ 511.7
                   =========  =====  =======  ========  ======= =========




    See accompanying Notes to Unaudited Condensed Consolidated
                       Financial Statements.



<PAGE>


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

                                                13 Weeks Ended
                                            April 27,     April 28,
                                              1997          1996
Cash provided by (used for):
Operations

Net income (loss)                               $  0.4     $  (3.4)
Adjustments to reconcile net loss
to operating cash flows:

 Depreciation and goodwill amortization           12.0          9.6
 Change in other long-term
 assets and liabilities                          (0.4)          1.7
 Cash provided by (used for) current
 assets and current liabilities:

 Increase in inventories                        (13.1)       (13.7)
 Decrease in property held for resale               --          3.4
 Increase (decrease) in accounts payable           0.9        (1.8)
 Other, net                                     (52.8)       (31.1)
                                           ------------  -----------
Net cash used for operations                    (53.0)       (35.3)
                                           ------------  -----------

Investing

Capital expenditures                            (14.2)       (18.3)
                                           ------------  -----------
Net cash used for investing                     (14.2)       (18.3)
                                           ------------  -----------

Financing

Net funding from credit facility                  50.0         65.0
Proceeds from construction funding                 7.7          3.0
Issuance of common stock                           6.0          0.7
Repurchase of common stock                       (5.9)           --
                                           ------------  -----------
Net cash provided by financing                    57.8         68.7
                                           ------------  -----------
Net increase (decrease) in cash and
equivalents                                      (9.4)         15.1
Cash and equivalents at beginning of
year                                              42.6         36.5
                                           ------------  -----------
Cash and equivalents at end of period          $  33.2      $  51.6
                                           ============  ===========

    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 26, 1997 ( the
1996 consolidated financial statements).

      The  Company's  fiscal year ends on the Sunday  immediately  preceding the
last Wednesday in January.  At April 27, 1997,  the Company  operated a chain of
930 mall-based bookstores,  163 book superstores,  and 3 music stores throughout
the United States.


<PAGE>


                        BORDERS GROUP, INC.

                   NOTES TO UNAUDITED CONDENSED
                 CONSOLIDATED FINANCIAL STATEMENTS
        (Dollars in millions except per common share data)

Note 2 - Commitments and Contingencies

      There are  various  claims,  lawsuits,  and  actions  pending  against the
Company and its subsidiaries  which are incident to their operations.  It is the
opinion of  management  that the ultimate  resolution  of these matters will not
have a material effect on the Company's liquidity, financial position or results
of operations.

      During  1994,  the Company  entered into an agreement in which leases with
respect to four  Borders'  locations  serve as collateral  for certain  mortgage
pass-through  certificates.  These 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 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. Kmart has failed to maintain  investment grade ratings and
therefore these notes are now subject to put by the holder.  To date, the holder
has not exercised its rights to put the notes.

      The Company does not believe  that the note  purchase,  if required,  will
have a material effect on the Company's financial position or earnings.

Note 3 - Financing

Credit  Facility:  The Company  has a credit  agreement  which  provides a $300,
five-year  working capital  facility.  Borrowings under the credit facility bear
interest at a base rate or an increment over LIBOR at the Company's option.  The
credit agreement contains operating  covenants which limit the Company's ability
to incur  indebtedness,  make  acquisitions,  dispose  of  assets  and  issue or
repurchase,  in excess of $50 million,  its common  stock,  pay dividends on its
common  stock,  and  require  the  Company to meet  certain  financial  measures
regarding fixed charge  coverage,  leverage and tangible net worth.  The Company
had borrowings  outstanding under the credit facility of $80.0 at April 27, 1997
and $135.0 at June 6, 1997.

Lease Financing Facility:  On November 26, 1995, the Company entered into a five
year, $150 lease financing  facility ("the  Facility") to finance new stores and
other property through operating leases.  The Facility will provide financing to
Lessors through loans from a third party lender for up to 95% of a project 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 will be 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. There was $114.6 outstanding under the lease
facility at April 27, 1997 and $119.0 at June 6, 1997.

<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 superstores and the largest operator of mall-based bookstores in the United
States  based  upon both  sales and number of  stores.  At April 27,  1997,  the
Company operated 163 book superstores under the Borders name, 930 mall-based and
other  bookstores  primarily under the Waldenbooks  name, and 3 stores under the
Planet Music name.

      The  Company's  first  quarter of 1997 and 1996  consisted of the 13 weeks
ended April 27, 1997 and April 28, 1996, respectively.

Results of Operations

      The following table presents the Company's  statement of operations  data,
as a percentage of sales, for the periods indicated:

                                            13 Weeks Ended
                                        April 27,    April 28,
                                          1997         1996
                                       -----------  -----------

       Sales                               100.0%       100.0%
       Cost   of   merchandise   sold,
       including occupancy costs             75.7         76.9
                                       -----------  -----------

       Gross margin                          24.3         23.1
       Selling, general and
       administrative expenses               23.8         23.8
       Pre-opening expense                    0.1          0.1
       Goodwill amortization                  0.1          0.1
                                       -----------  -----------

       Operating income (loss)                0.4       (0.9 )
       Interest expense                       0.2          0.5
                                       -----------  -----------

       Income (loss) before income tax        0.2       (1.4 )
        Income tax (benefit)                  0.1          0.5
                                       -----------  -----------

       Net income (loss)                     0.1%       (0.9%)
                                       ===========  ===========



<PAGE>


Store Activity

The Company's store activity is summarized below:

                                     Quarter Ended        Year Ended
                                April 27,    April 28,      January
                                   1997         1996       26, 1997
                                -----------  -----------  ------------

Borders Superstores
Beginning number of stores             157          116           116
Openings                                 6            8            41
                                -----------  -----------  ------------


Ending number of stores                163          124           157
                                ===========  ===========  ============


Walden Mall Bookstores
Beginning number of stores             961          992           992
Openings                                 1            1             9
Closings                              (32)         (17)          (40)
                                -----------  -----------  ------------

Ending number of stores                930          976           961
                                ===========  ===========  ============



13 Weeks Ended April 27, 1997 and April 28, 1996

      Sales in the first quarter of 1997 were $463.6  million,  a $59.6 million,
or 14.8%,  increase  over  first  quarter  1996  sales of $404.0  million.  This
increase  reflects  a $62.5  million,  or  30.7%,  increase  in  Borders'  sales
resulting from new store openings and a comparable store sales increase of 9.5%.
This  increase  was  offset in part by a decline  in  Waldenbooks  sales of $2.9
million due to store  closings  offset by a 1.1%  increase in  comparable  store
sales.

      Cost of merchandise sold, including occupancy costs, was $350.8 million in
the first quarter of 1997, as compared with $310.8  million in the first quarter
of 1996. Gross margin as a percentage of sales was 24.3% in 1997 versus 23.1% in
1996.  Management  attributed  the 1.2%  increase in gross margin to a number of
factors,   including  continued   improvements  in  distribution  and  inventory
shrinkage  results,  improved  merchandise  mix  management,  and a  decline  in
occupancy expense as a percentage of sales due to both the continued  maturation
of the Borders stores and the continued  shift in sales base from mall stores to
superstores.

      Selling, general and administrative ("SG&A") expenses in the first quarter
of 1997 were up $14.2 million,  or 14.8% over SG&A expenses in the first quarter
of 1996 ($110.4  million versus $96.2 million).  As a percentage of sales,  SG&A
expenses were unchanged due to the ongoing leveraging of corporate overhead over
the Company's  expanding sales base,  offset by increased  spending on strategic
initiatives.


<PAGE>


      Pre-opening  expense  in the first  quarter  of 1997 was $0.3  million  as
compared to $0.4 million in 1996.  Pre-opening  expense consists  principally of
grand-opening  advertising expense and store payroll related to the opening, and
is expensed in the first full fiscal month of a store's operations.  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  6  Borders  superstores  and 1
Waldenbooks  mall-based  store in the first  quarter  of 1997 as  compared  to 8
Borders superstores and 1 Waldenbooks store in the first quarter of 1996.

      Goodwill  amortization  was $0.3 million in both the first quarter of 1997
and 1996.

      Interest expense was $1.0 million in the first quarter of 1997 as compared
to $1.9 million in 1996.

      Income  tax  expense  in the first  quarter  of 1997 was $0.4  million  as
compared to a benefit of $2.2 million in 1996.

Liquidity and Capital Resources

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

      Net cash used for  operations  for the 13 weeks  ended  April 27, 1997 was
$53.0  million as compared to $35.3 million in the  corresponding  period in the
prior year.  The current  year  activity  primarily  reflects net income of $0.4
million  combined with a decrease in other current  liabilities of $52.8 million
and an increase in inventories  of $13.1 million.  The increase in cash used for
operations as compared to the prior year is primarily  attributable to decreases
in taxes payable, accrued liabilities, and other non-trade accounts payable.

      Net  cash  used for  investing  for the  first 13 weeks of 1997 was  $14.2
million as compared to $18.3 million in the first 13 weeks of 1996.  The Company
opened 6 new superstores  and 1 new  Waldenbooks  store in the first 13 weeks of
1997 versus 8 new  superstores  and 1 new  Waldenbooks  in the first 13 weeks of
1996.

      Net cash  provided  by  financing  in the first 13 weeks of 1997 was $57.8
million versus $68.7 million in the first 13 weeks of 1996. Net cash provided by
financing  resulted  primarily from net borrowings under the credit facility and
proceeds from construction funding.

      The Company  anticipates that planned closings of Waldenbooks  stores will
decrease  Waldenbooks'  annual working capital  requirements.  On a consolidated
basis,  the Company  expects its working  capital  requirements to increase as a
result of its expansion program for its Borders books and music superstores.

      In 1995 the Company entered into a $300 million, five-year working capital
line of credit,  with a syndicate  of banks.  The  Company had $80.0  million in
outstanding borrowings under the Credit Facility as of April 27, 1997.

<PAGE>


      On November 26, 1995, the Company  entered into a five year,  $150 million
lease financing  facility ("the Lease Facility") to finance new stores and other
property through operating leases.  The Lease Facility will provide financing to
Lessors through loans from a third party lender for up to 95% of a project cost.
It is expected that Lessors will make equity  contributions  approximating 5% of
each project.  Independent of its obligations as lessee,  the Company guarantees
payment when due of all amounts  required to be paid to the third party  lender.
The principal  amount  guaranteed  will be 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.  There were 32 properties  financed  through the
lease  facility,  with a financed  value of $114.6  million,  at April 27, 1997.
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 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 line of  credit.  Kmart has  failed to  maintain  investment  grade
ratings,  and  therefore,  these notes are now subject to put by the holder.  To
date, the holder has not exercised its right to put the notes.

      The Company does not believe  that the note  purchase,  if required,  will
have a material effect on the Company's financial position or earnings.


<PAGE>


                    PART II - OTHER INFORMATION

Item 6.  Exhibits and reports on form 8-K

Exhibits:

(a)   Exhibits: 11.1 Statement of Computation of per share earnings
                27.0 Financial Data Schedule

(b)   Reports on Form 8-K:  None



<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   11  , 1997             By:          /s/
           ------                      -------------
                                       George R. Mrkonic
                                       Vice Chairman and Director
                                       (Principal Financial and
                                        Accounting Officer)