updated 11/5/2009 7:35:19 PM ET 2009-11-06T00:35:19

Borders Group Inc., the second-largest U.S. bookstore chain, said Thursday it would shutter more of its small-format Waldenbooks stores in January as it focuses on its more profitable superstores.

The company is shuttering 200 Waldenbooks stores and cutting 1,500 jobs in January to make the chain smaller and more profitable. About 130 mall-based stores will remain open

Borders, based in Ann Arbor, Mich., said the closings would leave about 130 Waldenbooks stores still in business.

The company said the closing will not affect any Borders superstores or any of its mall kiosks, including 500 Day by Day Calendar Co. spots and other mall-based stores.

Borders has been slowly closing Waldenbooks. It shut down 112 stores fiscal 2008 and an average of about 66 stores each year between fiscal 2001 through 2007.

Michael Norris, senior trade analyst at Simba Information, said the move is a way to focus on superstores, which make more money and cost less per square foot to operate than smaller stores.

"In a way they kind of have to do this, because Barnes & Noble is ahead of them in phasing out small-format stores," he said.

Borders chief rival, Barnes & Noble, based in New York, said last month it would close all of its remaining 50 B. Dalton stores by the end of January.

But Borders said it expects a smaller Waldenbooks segment, with 130 stores, can be profitable.

"We believe there remains an opportunity to profitably operate a much smaller Waldenbooks segment that complements our core Borders superstore business and continues to serve readers in their communities," said Borders CEO Ron Marshall in a statement.

Previously purchased gift cards will be valid as long as the stores remain open and at any Borders, Waldenbooks or Borders.com, the company said.

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