Having received no proposals from “going concern” bidders, Borders Group plans to close the entertainment retailer’s 399 outlets, subject to the approval of a U.S. bankrputcy court.
Some stores and facilities could close as soon as July 22, with Borders expecting to complete the liquidation by the end of September. The loss of brick-and-mortar retail space is not without ramifications for book and magazine publishers, not to mention DVD and Blu-ray marketers; news of the liquidation, however, hardly comes as a surprise to the industry.
“We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now,” said Mike Edwards, Borders Group president, in a statement. Edwards related similar sentiment in a letter to the company’s 10,700 employees obtained by The Wall Street Journal.
Meanwhile, Kobo, the e-reader company with whom Borders had partnered, continues to assume direct support of Borders customers’ e-book accounts. Following Borders’ liquidation announcement, Kobo reiterated its corporate independence from the chain in a statement to TechCrunch: “As one of the early investors in Kobo, Borders has a minority stake in our company and serves as part of our distribution in the U.S. along with Walmart, Best Buy, Sears and other retailers. As a member of the broader book publishing and retailing community, we are watching Borders’ story with interest and send our best wishes to all the people of Borders.”
Borders Group is reportedly in last-ditch talks to save at least some of its 400 remaining bookstores from liquidation.
The company is in discussions with Birmingham, Ala.-based Books-A-Million, the Wall Street Journal reports, although the scope of the proposed deal with the regional bookstore chain is not known.
Private equity firm Najafi Companies, whose acquisition proposal drew creditor objections last week, “reluctantly” declined to bid on Borders by a July 17 deadline (via Bloomberg). With an auction for the company set for July 19, the only bid is reportedly from a group of liquidators led by Hilco Merchant Resources and Gordon Brothers Retail Partners.
Announcing its Chapter 11 bankruptcy filing on Wednesday, Borders said that it must immediately close 200 of its 642 U.S. stores to successful reorganize operations, according to court documents obtained by Bloomberg.
Counsel for the country’s second-largest bookseller stated that the stores targeted for closure are currently losing $2 million per week.
The company also announced that it had received commitments for $505 million in debtor-in-possession financing led by GE Capital, Restructuring Finance. “This financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience,” said Borders Group president Mike Edwards in a statement. “It also affords Borders the opportunity to move forward in implementing the appropriate business strategy designed to reposition Borders to be a potentially vibrant, national retailer of books and other products.”
Borders Group CFO Mark Bierley will now serve as COO for Borders, Inc., overseeing finance, IT, merchandising planning and supply chain for the entertainment and media retailer. Bierley joined Borders in 1996 as a store inventory control manager. Via PR Newswire
Reporting a 16 percent revenue decline for its first quarter, Borders Group said yesterday that it expects its revamped Borders.com store and forthcoming Kobo e-book reader (in stores July 2) to offset slumping physical media sales. In an interview with Reuters, interim chief executive Mike Edwards acknowledged the specialty retailer is “a little late to the game” of digital distribution. However, Edwards added, “The game’s just starting, and we won’t see the full shakeout of the digital revolution for at least another six months to a year.”
Domestic same-store sales at Borders were down 11% during the first quarter. Factoring out music, movies, and other “multimedia” categories — which the retailer has substantially curtailed in stores since 2009 — comp sales were down by 7% year over year. By Reuters
Target Stores and Borders Group are releasing exclusive DVD/Blu-ray Disc sets of Summit Home Entertainment’s teen vampire hit The Twilight Saga: New Moon when it hits retail March 20. The movie, which ranked No. 4 among the top box office hits in 2009 with nearly $294 million in ticket sales in the United States and $410 million internationally, is expected to be one of the top packaged-media releases in 2010. By Home Media Magazine
Ron Marshall has stepped down as chief executive of Borders Group Inc. and, according to people familiar with the situation, will be named CEO of Great Atlantic & Pacific Tea Co. Borders Group, the nation’s second-largest bookstore chain, said Marshall had resigned effective immediately. The move comes a week after Borders posted a steep drop in revenue and same-store sales for the holiday period. By The Wall Street Journal