Bookseller Borders going out of business
The nation's second-largest book chain can't find a buyer. Nearly 11,000 people will lose their jobs. Almost 400 stores will close. Going-out-of-business sales could start by Friday.
The liquidation means that more than 10,700 people who still work for Borders -- including about 400 at its Ann Arbor, Mich., headquarters -- will lose their jobs. The announcement came shortly after the stock market closed.
Borders' 399 remaining stores will be closed quickly, with liquidation sales starting as soon as Friday and finishing up by September.
Borders could not overcome competition from larger rival Barnes & Noble (BKS) and Amazon.com (AMZN), which began to dominate book retail when the industry shifted largely online. Borders, which had filed for Chapter 11 in February, also never was able to come up with an electronic reader like Amazon's Kindle and Barnes & Noble's Nook.
Borders, which had a 10.7% share of the U.S. retail book market, had hoped to sell itself to Arizona buyout firm Najafi Cos., which owns the Book-of-the-Month Club. While Najafi was willing to pay $435 million for the assets, the deal fell apart last week after creditors objected to terms that would have allowed Najafi to liquidate after the sale.
Earlier Monday, Reuters reported that Books-A-Million (BAMM), the nation's third-largest bookstore chain, was in talks to acquire a small number of Borders stores.
Borders said in a filing late today that it had received a bid for 30 stores and that it may seek bankruptcy court approval to sell the leases and their inventories. It wasn't clear if the offer had come from Books-A-Million.
Borders will sell itself to a group of liquidators led by Hilco Merchant Resources and Gordon Brothers Retail Partners. The liquidators had submitted what's known as a "stalking horse" bid. That means it made an offer but the company could accept a bitter bid. No bid emerged.
"Everyone at Borders has helped millions of people discover new books, music and movies, and we all take pride in the role Borders has played in our customers’ lives," Borders President Mike Edwards said in a statement.
The company -- which had closed more than 230 stores since its bankruptcy filing -- has continued to lose millions every month.
A New York bankruptcy judge will be asked to officially approve the liquidation at a hearing on Thursday.
"I’ve always enjoyed shopping at Borders and so have a lots of other people. It’s going to have a pretty bad effect on the industry," Michael Norris, a publishing industry analyst with Simba Information, told Ann Arbor.com, the online operation of the Ann Arbor News.
The bankruptcy is also a major blow to retail landlords throughout the country. Borders, which leases all of its stores, has an average of about 25,000 square feet per superstore. The chain has about 270 superstores and 130 small-format locations.
During the bankruptcy process, book publishers turned into an obstacle to Borders’ reorganization. Borders' top seven unsecured creditors, including publishers such as Simon & Schuster and Random House, were owed more than $193 million, according to bankruptcy filings.
Borders' management failed to capitalize on the sales opportunity created by the emergence of the Internet, built a network of superstores that turned out to be far too large and didn’t develop an electronic books strategy.
If there's any solace for Borders workers, it's that Cisco Systems CSCO), the giant networking company, is cutting 6,500 jobs, about 9% of its work force, a move meant to cut costs and boost the company's sagging stock price. Another 5,000 will be cut from the payroll when Cisco sells a manufacturing plant in Juarez, Mexico, to electronics manufacturer Foxconn International. Employees will work for Foxconn under terms of the deal.
Borders was founded in Ann Arbor in 1971 by brothers Tom and Louis Borders. The brothers sold the company to Kmart in 1992, which owned Waldenbooks at the time. The businesses were merged and spun off in 1995.
The company expanded rapidly between 1992 and 2006. What wasn't apparent to the management was that sales per square foot began to decline as early as 1997, a sign of a market that was becoming glutted and later by hit the Great Recession.
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Sad. I like Borders so much better than B&N. Borders isn't as "snobby" while their staff still (usually) knows how to help you and are absolutely no book-slouches themselves. It is sad so many will be out of work.
As for it being the President's fault they're out of work...what??? How do you come up with that? You can blame the current administration (whether justly or not) for the economy where they'll have a hard time finding new jobs or for their foreign policy or the like, but the fact that Borders was having a hard time comes down to a huge change in the market (US...we're moving to online shopping and digital downloads) and Borders not being able to keep up with the trend. It sucks (I hope books...old-fashioned bound books...never go out of style).
The last company that made typewriters closed their doors several months ago. It wasn't a U.S. company, but are you also going to blame the current President for their troubles? It had to be his policy and NOT the fact that nobody uses typewriters anymore....
The recession hit in 2008. No President, including Obama in 2009, could have prevented this demise. He did the best he could which was to pay a huge bill to keep this country from another Great Depression. The President can't make private companies stay in business or stop them from downsizing. Government does not produce jobs that the taxpayers don't pay for and it's already TOO big to be supported. We paid for 2 wars using 100% borrowed money and now they want payment. It's time people wake-up and actually learn how this economy operates. The President can't help us - we have to help ourselves.
It's a sign of the times. How many record stores are left? Tweny years ago, every shopping mall had at least one or two. Look what happened to the video rental business, and Blockbuster in particular. The next thing to go will be daily newspapers.
This is disappointing. I understand the convenience of shopping online, but to me, there is just something special about the FEEL of a book in my hands, and I enjoyed spending hours browsing at the Borders stores. Fortunately, we have a GREAT indie bookstore in Denver.
Thanks, Borders... you were a good friend for a long time.
If the lights ever go out most people in America won't be able to survive. Sadly books are going and soon our children won't be able to sign their name, LOL.
Can you even imagine what would happen if people had to work with their hands again and think without a computer?
I totally agree..with the amount of people out of work already, here come another 10,000. I don't know where they are going to find jobs that are not out there.
I liked Borders better than I did Barnes and Noble but they always built their stores in out of the way places hard to get to.
I would think they would be able to keep a few of their stores open, but that's the way the economy is going. I will always buy books..as long as they are available. You can't have an author sign your Nook or Kindle.
Wow, it seems some of you are pretty cynical. I, for one, never like to see any business go under. It is bad for the economy, and the morale of the citizenry. I have never been to a Borders in my life (I'm a B&N person) but it is too bad they have been unable to keep up with the market place. It seems to me that some of the people who have posted here could use some more time reading (no names; nelnel), then perhaps you could pick up some rules for basic sentence structure, and grammar. To all the people out here who have posted inflammatory comments on various subjects (homosexuals,liberals, and whatever else there is out here) you should really get a job, or volunteer, or just do something more productive than coming online just to try and offend others.
11,500 people at Cisco are getting the axe and that is supposed to make the people losing their job at Borders feel better? I fail to see the real relevance to the story. I really don't understand why the author put that comment into the story.
Our remaining Borders are good stores at good locations. I hope Books-A-Million or BN pick up a few of the locations. Better yet -- let's see an Amazon brick and morter. Wouldn't that be crazy!
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