Here we go: the first of the smaller booksellers is hitting the ropes as Borders, a once thriving book chain, files for bankruptcy. The company is closing 200 stores and posted $1.29 billion in debt and $1.27 billion in assets.
The chain was last to market with a usable e-reader platform and still hasn’t gained the traction that Amazon and Barnes & Noble have with the Kindle and Nook. The Kobo, their own solution, is actually quite nice but seems to be flat in terms of sales.
Borders Group President Mike Edwards says:
“It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company’s lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term. To position Borders to remedy this condition, Borders Group, with the authorization of its board of directors, has filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code. This decisive action will give Borders the opportunity to achieve a proper infusion of capital in order to have the opportunity to have the time to reorganize in order to reposition itself to be a successful business for the long term,” said Mike Edwards, Borders Group President.
Essentially they’re trying to pull a Blockbuster and hop on a moving train – ebooks – without getting hurt. My concern is that the train is already far too far out of the station to warrant the effort.
Everything about the company should remain the same, barring the store closings, and gift cards and credits will be honored as before.
Borders has identified certain underperforming stores — equivalent to approximately 30 percent of the company’s national store network — that are expected to close in the next several weeks. At the same time, the company noted that a major strength of Borders is its national presence, and its extensive network of remaining stores as well as Borders.com, will continue to run in normal course. The company emphasized that the closings were a reflection of economic conditions, cost structures and viability of locations, among other factors, and not on the dedication and productivity of the workforce in these stores.