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 Post subject: Borders
PostPosted: Wed Mar 25, 2009 5:34 pm 
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Borders to unveil strategy next week; delisting possible
http://www.freep.com/article/20090325/B ... g+possible

by Greta Guest
Detroit Free Press Business Writer
March 25, 2009

Borders Group Inc. shares languish below the price of a candy bar, its new CEO is closing stores and slashing payroll and turnaround experts differ on its fate.

The Ann Arbor bookseller reports fourth-quarter results next week. And the expectation is for more multimillion-dollar losses, turnaround experts say. Borders said its holiday sales at stores open at least a year fell 14.4%.

Shareholders will hear more about the company's strategy next Wednesday when CEO Ron Marshall hosts a conference call with analysts and investors.

What they know already is that the retailer is in danger of being delisted from the New York Stock Exchange. Its shares closed Tuesday at 64 cents, down 60% in the four months since it announced it was no longer for sale.

Meanwhile, chief competitors have seen huge gains in share prices. Amazon is up 71% to $72.70 and Barnes & Noble, thought to be Borders' most likely suitor, has risen 53% to $23.01.

Borders has been cutting costs in the past year while spending big on an e-commerce site. It has announced some store closings including the downtown Detroit and Chicago's Michigan Avenue stores and cut 1,152 jobs. The company employs 27,000 at more than 1,000 stores.

Ken Dalto, a Farmington Hills-based turnaround expert, said Borders' strategy seems to be one of buying time and hoping economic recovery is just around the corner.

"They are figuring their brand name is going to carry them," Dalto said. "Brand names mean less with the inroads of technology. The brand name is Amazon."

Dalto said staffing cuts and dropping small things like free bookmarks could hurt the in-store experience.

"It is a self-liquidation," he said.

Jim McTevia, managing partner of Bingham Farms-based McTevia Associations LLC, a turnaround firm, said he thinks Borders could seek Chapter 11 protection, but it wouldn't solve the bookseller's business problems.

"Depending on their ability to get debtor-in-possession financing, they could easily file for Chapter 11," he said. "It is much easier to facilitate the sale of a troubled company under bankruptcy protection."

Borders' turnaround plan, started in 2006 under then-CEO George Jones, put a lot of faith in its new e-commerce site Borders.com. But in January, Borders said the site would not be profitable during the year as previously forecast.
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And in January, when Jones was ousted in favor of Ron Marshall, who has retail and turnaround experience, the architect of Borders.com, Kevin Ertell, was let go.

Borders spokeswoman Anne Roman said Tuesday that the store closures and staff cuts were part of efforts announced last year to cut costs.

"We haven't announced that many store closures," she said. "I'm sure Ron will address on the conference call what he envisions for the company moving forward."

The Web cast begins at 8 a.m. Wednesday and can be accessed at http://www.bordersgroupinc.com.

Borders has received two extensions from its largest shareholder, Pershing Square Capital Management LP, to repay a $42.5-million loan. The latest one requires repayment on April 15 and an additional fee of $750,000.

Borders also is expected to ask shareholders to approve a reverse stock split at its annual meeting on May 21 to use if necessary to push the share price above $1 and avoid delisting.

The retailer with $3 billion in annual sales reported $216 million in losses in three quarters last year. Marshall has said the company planned to get its costs in line before attempting to grow sales.


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 Post subject: Borders
PostPosted: Thu Apr 02, 2009 9:52 pm 
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Borders hopes a refocus on books will revive sales
http://www.detnews.com/article/20090402 ... vive+sales

Jaclyn Trop / The Detroit News


Borders Group, the nation's second-largest bookseller, is looking to return to its roots as an outlet for serious readers, as part of an effort to revitalize sales following another year of losses, company officials said Wednesday.

The Ann Arbor-based retailer plans to focus on book sales and offer more children's, cooking and biography titles, while scaling back its multimedia inventory, including CDs and DVDs.

The increasing popularity of digital download services such as iTunes has curtailed the chain's movie and music sales.

The ailing company also will concentrate on customer outreach "to regain our status as a bookseller for serious readers," CEO Ron Marshall said Wednesday during a conference call to discuss the bookseller's fourth quarter and full-year results.

Borders traces its beginnings to a small bookshop in Ann Arbor, founded by brothers and University of Michigan students Tom and Louis Borders in 1971.

Over the years, the store's focus expanded beyond books and magazines to include music, gifts and stationary, as well as food through a partnership with Starbucks subsidiary Seattle's Best Coffee.

Marshall, who replaced former chief executive George Jones in January, has been charged with rescuing Borders from declining sales.

Fourth-quarter total sales fell 13 percent to $1.1 billion, while net income declined 54 percent to $29.6 million, or 49 cents a share, from $64.7 million, or $1.10, a year earlier.

It was only the second quarterly profit in three years for Borders, which put itself up for sale unsuccessfully last spring.

The industry has been pummeled by competition from online and discount retailers such as Wal-Mart, Costco and Amazon.com, as well as a downturn in discretionary spending as the national recession deepens.

Borders also had a dismal holiday season, with sales for the nine-week period ending Jan. 3 down 11.7 percent compared with the previous year. Sales for Borders superstores were down 13.6 percent for the holiday period.

Overall, total losses for 2008 were $184.7 million, or $3.07 per share, compared to a loss of $19.9 million, or .34 cents per share, in 2007. Total sales for 2008 dropped 8.8 percent to $3.2 billion.

Bankruptcy predicted

Borders also will focus on improving its financial health, closing the gap with its competitors and streamlining operations, from customer service to logistics to information technology, Marshall said.

But the downsizing and cuts in inventory most likely won't staunch Borders' money losses, according to Jim McTevia, managing partner of Bingham Farms-based turnaround firm McTevia & Associates. He said Borders will probably be forced to file for Chapter 11 bankruptcy protection this year.

"The economy is worse off than it was last year, and they lost a ton of money last year," McTevia said. "The first quarter results will probably be the nail in the coffin."

The company reduced its debt by $218 million, or 39 percent, through job cuts and store closures. Detroit's only store, which opened in the Compuware Building on Campus Martius Park in 2003, is scheduled to close in July.

Debt reduction alone can't save the chain, Marshall said. "We must sell our way to success," he said.

Monday, the company's largest shareholder, New York-based Pershing Square Capital Management LP, extended to April 2010 a deadline for Borders to pay a $42.5 million loan.

Borders employs 30,000 people at 1,100 stores in the United States, Australia, New Zealand, Singapore and Puerto Rico, including nearly two dozen in Metro Detroit.

Borders has been in danger of being delisted from the New York Stock Exchange since Dec. 1, when its share price fell below $1. The company has until June to raise its stock price.

The share price hit a low of 35 cents on Dec. 23. Shares closed at 92 cents Wednesday afternoon.


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 Post subject: Borders
PostPosted: Sat Apr 04, 2009 10:51 pm 
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Borders' turnaround plan, started in 2006 under then-CEO George Jones, put a lot of faith in its new e-commerce site Borders.com. But in January, Borders said the site would not be profitable during the year as previously forecast.
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When are these companies going to learn that you are what you are, not an E-retailer but a box store who may be supplemented by online. Stupid assh&*(!

It doesn't work in reverse either. I remember when Gateway computer announced store opening. Dumped the stock the next day. By doing this, every state they opened prevented no taxation for online orders. Mailorder, their bread & butter. Dumb asses!

Rick A.

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 Post subject: Borders
PostPosted: Sun Apr 05, 2009 12:32 pm 
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That's what Borders gets for hiring a country singer as their CEO.

Image

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 Post subject: Borders
PostPosted: Sun Apr 05, 2009 12:49 pm 
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Especially a country singer whose subject matter mostly falls around lives of ruin caused by the demon alchohol. Great post, Chris. R-O-T-F-L-M-A-O!


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 Post subject: Borders
PostPosted: Sun Apr 05, 2009 1:14 pm 
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Murdog wrote:
Especially a country singer who's been arrested for driving a lawn mower while under the influence.


Fixed.


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 Post subject: Borders
PostPosted: Sun Apr 05, 2009 7:44 pm 
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Rick A wrote:
Borders' turnaround plan, started in 2006 under then-CEO George Jones, put a lot of faith in its new e-commerce site Borders.com. But in January, Borders said the site would not be profitable during the year as previously forecast.
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When are these companies going to learn that you are what you are, not an E-retailer but a box store who may be supplemented by online. Stupid assh&*(!

It doesn't work in reverse either. I remember when Gateway computer announced store opening. Dumped the stock the next day. By doing this, every state they opened prevented no taxation for online orders. Mailorder, their bread & butter. Dumb asses!

Rick A.

When I walked into a Borders last year and asked a clerk why their music and DVD inventory had been slashed in half, she cheerfully replied that if I could tell her what I was looking for, maybe they could order it for me; what they need to realize is that these days one shops at brick-and-mortar stores as an alternative to shopping online, not the other way around.


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 Post subject: Borders
PostPosted: Sun Apr 05, 2009 9:32 pm 
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AMW wrote:
what they need to realize is that these days one shops at brick-and-mortar stores as an alternative to shopping online, not the other way around

Well stated - not necessarily true in all cases, but certainly applicable to books and A/V media.


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 Post subject: Borders
PostPosted: Mon Apr 06, 2009 9:22 pm 
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Regarding ex-CEO G.J., I had written a note (diatribe) last week that didn't post, and it's probably for the best. In short, I worked at the company that hired him over 15 years ago for his first CEO job. He's been involved in bringing down four major retailers so far and will no doubt be hired by someone again for a ton of money. On a musical note, he could play guitar a bit if I recall. However, I would have more confidence in George the country singer's ability to run a company. Already, Borders' chances have improved by replacing him. I'm just saying...

I went to the Clearwater location Thursday night on the way to a Chicago concert, and I quite surprised by the sale. If I had some extra cash handy, I would have taken advantage of the savings. Instead, I just became discouraged that this store with a relatively deep CD catalog and section (particularly jazz) was moving away from what made it unique and fun for me. Plus, I (personally) knew who to blame. I had to leave quickly, and I have to stop talking about it now. :sigh:

Jim

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 Post subject: Borders
PostPosted: Mon Apr 06, 2009 10:35 pm 
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Puppy Monkey Alan!

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I'm amazed at how much credence is given to these "analysts" in these situations. I don't know if they don't realize the impact their words can have, or if they just get off on the power they think they have. No matter what Borders said, the guy in this article gloomed and doomed it. Replace "Borders" with "Obama", and his name with a right-wing analyst of your choice, and it was almost boilerplate stuff.

I hope Borders bounces back, I really do, because going to a one-store system isn't going to be good for anyone. I have no problems with Barnes and Noble, but they need pushed, just like Best Buy needed the push from Circuit City. BB has already cut way back on the DVDs they advertise.

Alan

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 Post subject: Borders
PostPosted: Tue Apr 07, 2009 8:16 pm 
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alantig wrote:
I hope Borders bounces back, I really do, because going to a one-store system isn't going to be good for anyone.


Agreed. While "the more, the merrier" is a trite phrase, the opposite would be "the fewer, the sadder". Fewer stores that offer CD's will definitely make us sadder. There's no upside.

Jim

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 Post subject: Borders
PostPosted: Wed Apr 15, 2009 4:19 pm 
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Why is Borders failing but Barnes and Noble succeeding?

I don't get it.


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 Post subject: Borders
PostPosted: Wed Apr 15, 2009 5:24 pm 
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Hanzo the Razor wrote:
Why is Borders failing but Barnes and Noble succeeding?

I don't get it.


Same here. B&N does have a better bargain book selection, but that's the only advantage that I can see. Otherwise I always thought that Borders stores were a tad more inviting than B&N ... although, honestly, I could happily waste a couple of hours at any of them.


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 Post subject: Borders
PostPosted: Wed Apr 15, 2009 11:00 pm 
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Puppy Monkey Alan!

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I don't get it either. Borders has a much better book selection in my area (especially in their music section). The bargain section at B&N is bigger, but doesn't seem to turn over much. There's not much price difference.

I think there are two things - one, I think there's been, over time, a perception that Borders has shifted away from their 'classic' business model, selling books. When they opened here, that's all they sold. Then came cafes, CDs, DVDs, numerous forays into electronics. B&N, in my area, hasn't suffered from that because they've had the cafes and music and DVDs from the get-go here.

Two, and possibly more importantly, Borders has failed repeatedly at establishing a competent web presence. They've gone w/Amazon a couple times, I think, and it's generally been outsourced. B&N seems to be much stronger in this area. Add in that Borders seems to do a very shoddy job of integrating their online stuff - I've found different prices online numerous times. Even worse, I've gone to the in-store kiosks and found DVDs that are in cases listed at one price, but the price on the actual DVD is different - most recently, the latest Three Stooges set. The computer showed it at $28 - even w/coupons, more than I wanted to pay. By accident, I saw another set laying flat in the case so I could see the price - $25. So I looked it up on the computer - $28. So, two issues - I can't see the price on the stuff in the cases (and aren't the cases so 1980s, especially since they put frigging anti-theft tags in EVERYTHING now?), and where I can look up the price, it's wrong.

Toss in that they made the rewards program much less rewarding (remember personal shopping days and holiday accounts?), the cafe stuff isn't as inviting, and they no longer discount all hardbacks (they used to be 10% off all the time), and it all starts to form a pretty clear picture.

Alan

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 Post subject: Borders
PostPosted: Wed Apr 15, 2009 11:58 pm 
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Ancient Alien Theorist

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The Rewards program is incredible now, as far as I can tell. It's the main reason I shop there.

I get a coupon every week in my e-mail; usually no less than 20% off, sometimes as much as 40% off. Those are massive savings. This week's deal is 30% off. That's outstanding. None of the other bookstories offer coupons that good from what I know.


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 Post subject: Borders
PostPosted: Thu Apr 16, 2009 12:03 am 
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Borders generally has a better graphic novel selection than B&N, but they're still missing most indie trades.


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 Post subject: Borders
PostPosted: Thu Apr 16, 2009 12:13 am 
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I live in MD and their indie section is almost as big as the superhero section.


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 Post subject: Borders
PostPosted: Thu Apr 16, 2009 9:29 pm 
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Puppy Monkey Alan!

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Hanzo the Razor wrote:
The Rewards program is incredible now, as far as I can tell. It's the main reason I shop there.

I get a coupon every week in my e-mail; usually no less than 20% off, sometimes as much as 40% off. Those are massive savings. This week's deal is 30% off. That's outstanding. None of the other bookstories offer coupons that good from what I know.


It's a fairly big part of why I shop there, as well (as well as loyalty). But the old program had some features I liked better. It's been a few years, so I forget all the details, but you earned a percentage (5%) of each purchase towards a holiday fund that you could use from something like mid-November until mid-January. I think they still had coupons, and you still accumulated Borders bucks. After something like $150 of purchases in a month, you earned a personal shopping day for the next month - 10% off everything (except periodicals, etc.) for the entire day - all items, not just one like most of the coupons, and you could make multiple purchases during the day (not much of an incentive, but nice if you needed it). And it came off sale prices, as I recall. And you could combine coupons w/the personal day. I can remember picking up a coffee-table CBC hockey book, list price of $50, for nothing because of my holiday fund and the 10% and another coupon or a sale price.

I guess it was too good to last for long, though...

Alan

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 Post subject: Borders
PostPosted: Fri Apr 17, 2009 9:46 am 
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I just got an email indicating remaining stock of CDs and DVDs in the stores clearing out there stock is down to 50% off. I've used this to swat up whatever SACDs (mostly classical) I could find but the closest Borders is an hour from me so I don't have many chances to take advantage of this clearance.

Still, I hate seeing another music retailer close out its CD stock. Pretty soon, all we'll have left as far as brick and mortar is Wal-Mart, Target, Best Buy and B & N...


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 Post subject: Borders
PostPosted: Fri Apr 17, 2009 12:29 pm 
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Ancient Alien Theorist

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You still get Borders Bucks-- for every $150, you get get $5. Just got mine a few weeks ago.


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 Post subject: Borders
PostPosted: Sat Apr 18, 2009 12:15 pm 
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TSmithPage wrote:
Still, I hate seeing another music retailer close out its CD stock. Pretty soon, all we'll have left as far as brick and mortar is Wal-Mart, Target, Best Buy and B & N...


You nailed it. As far as I can determine, there's no upside to this dwindling CD presence at retail.

(Also, don't forget about FYE, overpriced as they are. They, too, will become dinosaurs if they don't change their price structure.)

Jim

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 Post subject: Borders
PostPosted: Sat Apr 18, 2009 2:01 pm 
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JGordonBD wrote:
TSmithPage wrote:
Still, I hate seeing another music retailer close out its CD stock. Pretty soon, all we'll have left as far as brick and mortar is Wal-Mart, Target, Best Buy and B & N...


You nailed it. As far as I can determine, there's no upside to this dwindling CD presence at retail.

(Also, don't forget about FYE, overpriced as they are. They, too, will become dinosaurs if they don't change their price structure.)

Jim

I was somewhat shocked, but maybe not surprised, to recently see a list of every CD chain that FYE had purchased over the past 15 years or so. Specs, Camelot, Harmony House...you name it, they bought it. And then filled each store up with exactly the same stock.


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