Monday, April 27, 2009

Is Borders Doomed?

The Wall Street Journal predicts "Twelve Major Brands that Will Disappear" before the end of 2010. Borders is on the list with this explanation:

Borders (BGP) has struggled for several years as the No.2 operator of book store behind Barnes & Noble. When Border’s released its last set of earnings it said it would cut the number of Waldendbooks stores from about 300 to 50 or 60. With Border’s losses, that won’t be enough. The pressure from online book operations led by Amazon (AMZN) and new e-book readers is overwhelming Borders. In the fourth quarter of last year, sales at Border’s branded stores dropped 15.3%. For the full year 2008, Borders lost $157 million on revenue of $2.8 billion. Borders recently extended its $42.5 million senior secured term loan with Pershing Square Capital Management, moving the due date to April 1, 2010. That may be the day that Borders goes away. Border’s shares trade at $1.47, down from a 52-week high of $8.02.
Other brands on the list include Palm, Gap, and Crocs.

4 comments:

Jen - devourer of books said...

I don't know if they're doomed or not, but I make it a point to spend any Borders gift cards as soon as I get them, just in case. With Barnes & Nobles and Half Price Books I spend them as I want things.

Erin Skelly said...

I really hope they're not doomed. Borders is my preferred bookstore - I stop there several times a week on my way home from work and do all my in-person book shopping there. And I love their coffee shop, and their staff is very friendly and helpful. Plus, my local Borders has author readings and signings several times a week! This past Christmas, I did at least 50% (if not more) of my shopping at Borders. I know that one person alone cannot support an entire chain, but my local Borders is always packed, so I'm having a hard time understanding how they're doing poorly.
I would rather have the govt. bail out Borders than my bank. The potential failure of my favorite store is a sobering thought.

Meytal Radzinski said...

I have always preferred Borders over Barnes and Nobles. Something about the customer service there is always better, plus the store itself is usually much better organized. It would be most disappointing if Borders was the one to fail.

Anonymous said...

Truly a fascinating article...