Borders in trouble - B&N not much better

Discussion in 'Marketplace Discussions' started by paulg61, Dec 19, 2010.

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  1. Jay F

    Jay F New Member

    Location:
    Pittsburgh, PA
    I think he worked there once.
     
  2. Robin L

    Robin L Musical Omnivore

    Location:
    Fresno, California
    I used to work there. I used to oversee the CD department at the store. I watched it go away. My position went away, I went on to shelving books. I worked there for a long time, got kicked upstairs and then out. I did not like the way they got rid of me. So I suppose it's personal.

    At the same time, I'm passing on news—this does appear to be the time the hammer is falling. What is sad here, and perhaps an object lesson for all of us here on the forum, is how a company can have a major technological development at its inception, only to sit on its laurels then ignore other technological developments and fail to adapt to them. The Borders Brothers cooked up some very cool inventory/order software that made it much easier to maintain stock, control inventory and otherwise make really big bookstores possible and manageable. But they never were a player online. I suppose we all already know that.

    I really liked working at Borders. I liked turning music customers on to music, loved having a large stock selection to work/play with, spent hour upon hour picking through the CD shelves, looking for mis-placed items or working through return lists. I liked being the person everybody would go for music questions. But my perception is that retail is permanently warped by the online experience. I guess it's strange watching a tower fall, but that's what's happening right now—something unsustainable is collapsing under its own weight.
     
  3. Oatsdad

    Oatsdad Oat, Biscuits, Abbie & Mitzi: Best Dogs Ever

    Location:
    Alexandria VA
    Yes, you ARE passing on news, but you seem to ignore/dismiss any positive signs and only focus on the negative. Not saying that you're wrong and Borders isn't toast, but I think it seems mean-spirited to be so happy that a company might go out of business and leave lots of people unemployed.

    At least you admit you're bitter about your experiences there...
     
  4. Robin L

    Robin L Musical Omnivore

    Location:
    Fresno, California
    There's people I know who still work there. I really don't want to see them unemployed. One of the nicest people I know works there. However, I know a lot more people who used to work there. They got rather aggressive about unloading middle-managers about the time they unloaded me, there was a real wipe-out in the year that followed. The store I started working for is not the store that got rid of me.

    I'm sorry, but the G.E. Capital story and the Pershing Square stories are not really good news. All this talk about extending bad loans can only lead to the courthouse.
     
  5. KeithH

    KeithH Success With Honor...then and now

    Location:
    Beaver Stadium
    Or maybe the loan will allow Borders to turn itself around. Let's see how it shakes out. If Borders hadn't gotten the loan, a lot more people would likely be out of work today.
     
  6. bw

    bw Forum Resident

    Location:
    Cincinnati, OH, US
    Robin L, I appreciate the updates. Please keep them coming.
     
  7. Jay F

    Jay F New Member

    Location:
    Pittsburgh, PA
    Do you really think this is positive, Borders getting to borrow millions of dollars they're never going to be able to pay back? Like it or not (and I definitely do not--Borders is now my only bookstore), bookstores are as over as record stores. It's just taken a little longer.
     
  8. Oatsdad

    Oatsdad Oat, Biscuits, Abbie & Mitzi: Best Dogs Ever

    Location:
    Alexandria VA
    It's a positive sign for the chain's continued existence. Maybe it's not going to help in the long run, but at least it was a break from the continual doom and gloom.

    Again, I'm not saying Borders will start to thrive - or even still exist a year from now - but I don't think it's an absolute foregone conclusion that they're toast...
     
  9. Jay F

    Jay F New Member

    Location:
    Pittsburgh, PA
    I hope your continued optimism is as well-placed for Borders as it has been for Abbie, but I'm more hopeful for the poodle (mix? Whatever. She's so cute).
     
  10. Oatsdad

    Oatsdad Oat, Biscuits, Abbie & Mitzi: Best Dogs Ever

    Location:
    Alexandria VA
    If I have to choose a survivor, I'll take Abs over Borders! :D
     
  11. Jay F

    Jay F New Member

    Location:
    Pittsburgh, PA
    Me, too.
     
  12. jason100x

    jason100x Forum Resident


    Very true. I am rooting for Borders to get straightened out for a number of reasons, mainly I don't want to see anyone lose their jobs and I like shopping there, just bought a book there last night!
     
  13. Robin L

    Robin L Musical Omnivore

    Location:
    Fresno, California
    Borders Said to Prepare Bankruptcy Filing as Early as Next Week

    By Lauren Coleman-Lochner and Jonathan Keehner at Bloomberg - Feb 1, 2011 1:50 PM PT
    Borders Group Inc., the second- largest U.S. bookstore chain, may file for protection from creditors as soon as next week, according to three people familiar with the matter.

    The retailer will likely close at least 150 stores, one person said. The people declined to be identified because the proceedings aren’t public.

    Several private equity groups are weighing whether to provide a junior loan to the Ann Arbor, Michigan-based company, one of the people said.

    Mary Davis, a Borders spokeswoman, declined to comment and referred to a Jan. 27 statement from Borders President Michael Edwards. He said the company “is doing everything possible” to maintain its relationships with vendors and publishers. While his company has a financing commitment from General Electric Capital Corp., Borders may proceed to an in-court restructuring, Edwards said in the statement.

    Borders sank 26 cents, or 36 percent, to 47 cents at 4:01 p.m. in New York Stock Exchange composite trading, the largest decline since December 2008. New York-based Barnes & Noble Inc., the largest U.S. bookseller, advanced $1.17 or 7.4 percent to $16.92.

    The retailer, which operates more than 650 stores, began looking for new sources of cash after disclosing in December that lenders cut its borrowing capacity and that failure to find replacement credit may lead to a violation of its debt agreements and a “liquidity shortfall” in the first quarter.

    Borders delayed payments to publishers last month as part of an effort to restructure its financing and avoid a cash shortfall.

    Funding Conditions

    The retailer received a financing commitment of $550 million from the General Electric unit on Jan. 27. The funding had several conditions including securing $175 million from other lenders and $125 million in junior debt provided by vendors and lenders. The funding is also contingent on Borders completing a program to close stores.

    Borders has posted almost $800 million in losses since 2006 as it lost market share to competitors such as Amazon.com Inc. The retailer has also been slow to embrace digital reading, which continues to gain popularity with consumers.


    http://www.bloomberg.com/news/2011-...-bankruptcy-filing-as-early-as-next-week.html

    According to the Christian Science Monitor, Borders Group shares further descended in after-hours trading to 38 cents per share.

    http://www.csmonitor.com/Business/L...ankruptcy-book-chain-heading-for-dire-straits
     
  14. LordThanos1969

    LordThanos1969 Forum Resident

    Location:
    Phoenix, AZ, USA
    I appreciate the updates as well. It is fascinating to see how what looks like the end game for the chain unfolds. Will they be able to close some stores and reorganize successfully, or will they have to close the whole chain down like Tower did a few years ago?
     
  15. KeithH

    KeithH Success With Honor...then and now

    Location:
    Beaver Stadium
    Robin, you forgot to add :goodie:. ;)

    I expect they will announce the store closings soon. Hopefully they won't close my local store. It only opened three years ago and is a nice store. The next-closest Borders is about a half-hour away.
     
  16. Robin L

    Robin L Musical Omnivore

    Location:
    Fresno, California
    Can you smell schadenfreude?

    Seriously, there's so many down sides to Borders going under—it may seem like I'm :goodie: but I'm really more :thumbsdn:.

    This is bad for the book business and I really like books.

    By the way, if you think I sound disgruntled, try a current Borders employee on for size:

    In the countdown to our darkest hour, I go to Barnes & Noble

    In our countdown to the end, I found myself today on my day off wandering and looking for a product we don't carry in our store and will probably never get back in at this point. I went to a mom & pop used bookstore in my town, they didn't have what I was looking for. Suddenly I had a crazy idea... Go to Barnes & Noble!

    When I walked in, I couldn't help myself. The shelves were fully stocked! The cafe had Starbucks drinks that don't taste like burnt chemicals! There were people at the customer service desk who's primary function was to *gasp* HELP CUSTOMERS? The end caps looked exciting, the staff were smiling, and it looked like happy land. Barnes & Noble also had these people in the store.. I forget what they are called, we used to have them once--OH, customers! They had plenty of them for a Tuesday at 2:30PM when we're noticing the only sounds in our store is the Elton John & Leon Russell promo CD that we've been playing since November.

    I even managed to find my products on the shelf right where I assumed they would be. You couldn't--- I just--- *cries tears*

    When I walked up to the cash register, the very friendly cashier asked me a question I knew was coming... "Do you have a Barnes & Noble membership?" I said "Um, no...." He then asked me if I wanted to sign up for one, and I found myself not being able to lie. "Um, would you still offer if I told you I was a Borders employee?" He chuckled and said, "Oh, yeah, you probably wouldn't want to be caught with one of our cards." I then remember all of the smartass things that customers have been telling me over the past few months while trying to get them to convert to Borders Rewards Plus, and I said, "You know what? Give me the application, I'm signing up."

    The guy asked if I was serious, and I told him that I was as serious as a heart attack. Why was I serious?

    -Barnes & Noble had that awesome 50% off Criterion Collection sale while we offered 20% off "Merry Christmas, Mr Lawrence" and "The Darjeeling Limited." Wow, what a spectacular response to Barnes & Noble's sale that was, right? I figured since I'm a Criterion fan, why the hell not? And when I was told the sale would be back in June, I'm now saving my money for that day of awesomeness. I plan to spend more than $200 on Criterion Collection films at certain times and I've spent that much at a world famous record store not far from here each time I go up there and find stuff that we no longer sell, so the $25 bucks will end up coming back to me.

    -Barnes & Noble has inventory in the store. I like to read, and when I say I like to read, I don't want to read Snooki's autobiography or the hundreds of copies of "Eat This, Not That" filling in every blank spot on the bestseller bays. If the store isn't getting the books in that I want and I don't do online ordering for the sake of keeping retail employees like myself employed (as well as having the product in my hand instead of waiting for it to be delivered 3-10 days later), I figure anything that I buy will at least be 10% off. It wont be 33%, but you can't have everything.

    When I explained these 2 things, the guy saw my perspective and then said something I didn't expect him to say: "I'm sorry to hear you guys are having trouble. It'd be a shame to see you guys without jobs. But I have hope that you guys will make a turnaround." $25 dollars later, I realized that we used to be a store like Barnes & Noble. We used to have foot traffic in the store, we used to be there to help people find whatever it was they wanted with the high probability that we had it in stock, and we used to be happy doing it.

    It's definitely a shame that our end is probably near, and that even if we do get a lifeline thrown to us, it's not going to be very pretty given we know what comes out of Ann Arbor when they decide to get creative to save the business. I haven't thought much about Barnes & Noble over the years since I've worked for Borders other than they were the "jerks down the street who sell plastic cards to people if they want a discount." Yes, we make jokes about their e-Reader, and we point out that after we're gone that they're probably next. At the same time, they are booksellers, and it looks like they have a pretty good chance of survival.

    I hope one of us does survive in the fight against Amazon.com. I understand people just love Amazon.com, but they don't understand the company's shady labor practices and the fact that Amazon has become the Wal-Mart of books. Yes, it's cheaper online. Yes, they have the Kindle and we don't. And yes, you buy your World of Warcraft video game, Star Wars DVD collection, Glenn Beck's brand new book at 60% off, and a Fleshlight all on the same website all at the same time. What's not to love?

    But I still believe in bookstores, and I still believe that we're people who are dedicated to our love of books. Why else would we be sticking this out to the end? I'm sure all of us are in a desperate search for a new job, and some of us are a little bit afraid of the future. But as a consumer, I want to go into a store and read a chapter of a book before I buy it. I want to see what the staff are reading by looking in staff selection bays. I want to see endcaps that give me a choice of interesting books to read like we used to have before we put crap on them. I want the experience of going into a store and knowing that I could walk out with some great stuff.
    Posted at 02:52 am

    More, lots more:
    http://community.livejournal.com/iworkatborders
     
  17. Borders is not likely to survive much longer, the company can issue statements and file motions in bankruptcy court but nothing I can see can change the inevitable at this point. I always liked Borders but always liked Barnes & Noble better so all I can do now is hope B&N can survive.
     
  18. KeithH

    KeithH Success With Honor...then and now

    Location:
    Beaver Stadium
    I also like Barnes & Noble. As I've said in other threads, I just wish they had better deals on music.

    As for coffee, I love Starbucks, so I think it's great that Barnes & Noble has them. On the other hand, I had a Seattle's Best cafe mocha at a local Borders the other day that was very good. Their drinks are generally sweeter than Starbucks but still good. Of course, Starbucks owns Seattle's Best, so they get me coming and going. :D

    I have to believe that the situation for Barnes & Noble is fragile, but I wonder if they will take over any locations that Borders closes. There is a Borders ten minutes from me, while the closest Barnes & Noble is about 30 minutes away.
     
  19. misterclean

    misterclean Forum Resident

    Location:
    Cleveland, Ohio
    :confused:
     
  20. Phaserz On Stun

    Phaserz On Stun Forum Resident

    A ridiculous "incident" to be sure.

    So many of my experiences at good old Barnes & Noble have been the opposite of that incident. Truth be told, it has always been the other way around for me. Meaning, Borders is better. Whenever I go to Barnes & Noble they never have what Im looking for. And 9 times out of 10 I usually overhear someone else asking for something which they also do not have.

    Sure, Barnes & Noble might be having a really great sale now but thats because the stuff is so incredibly high the majority of the time nobody bothers to buy any of it. [Or nobody with any common sense would.] Id like for that person to go back when there is no sale and see what those prices usually are. The last time I walked through their music section, which was much smaller than Borders, it was insanely overpriced. They wanted $18.99 for The Beatles re-masters!?! The last album by Vanessa Carlton was priced at $16.99! No thanks.

    The books at Barnes & Noble are just as overpriced as their CDs.

    Why pay money for a membership when Borders is free? [I know they are charging money for one type but one is still free.] Barnes & Noble hardly ever sends out coupons and even if the do they are a joke.

    Many of the times Ive gone to Barnes & Noble they have always been empty. I NEVER would have had to wait in line, that is, if I wanted to buy something which I dont do there because they never had what I wanted.

    Lastly, the Barnes & Noble website is terrible! Very overpriced and most of the stuff is either out of stock or not even available.
     
  21. Robin L

    Robin L Musical Omnivore

    Location:
    Fresno, California
    Borders receives delisting warning from NYSE


    2/4/2011
    SAN FRANCISCO, Feb 4 (Reuters Legal) - Troubled bookseller Borders Group Inc said on Friday that the New York Stock Exchange warned it its low share price did not meet listing requirements.

    The company said it was notified on Thursday it was not in compliance with a NYSE rule that requires companies to maintain an average closing price of $1.00 over a 30 day trading period. Borders has six months to fix the problem.

    Shares last hit $1.00 on Jan. 28.

    Borders, which operates 500 namesake stores and is the second-largest book chain in the United States has been struggling for years with sliding sales and, most recently, with a cash crunch.

    The company is widely expected to file for Chapter 11 bankruptcy later this month. Doing so would allow it to shed costs and restructure while under protection from creditors.

    (Reporting by Alexandria Sage of Reuters; Additional reporting by Jeff Roberts of Reuters Legal)

    http://westlawnews.thomson.com/Bank...Borders_receives_delisting_warning_from_NYSE/
     
  22. Robin L

    Robin L Musical Omnivore

    Location:
    Fresno, California
    Say I drown in a barrel of wine when I get to the Border

    The Motley Fool weighs in [my emphasis in bold].

    Borders' Gift From GE: Some Assembly Required
    By G. David Frye
    February 4, 2011

    Borders Group (NYSE: BGP) received a small package from General Electric's (NYSE: GE) GE Capital arm last week -- a $550 million loan commitment to stave off creditors and possibly avoid bankruptcy. As thoughtful as this gift might be, it comes with activation conditions that will remind many parents of late Christmas Eve nights spent trying to assemble toys using cryptic directions.

    Among GE Capital's contingencies for lending the money:

    $175 million of the commitment to be syndicated to other lenders.
    $125 million in additional financing on the part of Borders' lenders and vendors.
    "Financing arrangements" with vendors, landlords and lenders, to convert existing accounts payable to junior subordinated debt.
    A plan in place to close underperforming Borders stores.
    The completion of GE's "due diligence" of Borders' business and finances.

    Borders' most recent balance sheet makes sense of GE's considerable caution. The beleaguered bookseller's book value is negative; in other words, its liabilities exceed its assets. Most of the liability side is "current" -- accounts payable, payroll, leases, and taxes. The company has little long-term debt, and one could argue that the GE arrangement is ultimately about converting short-term obligations into longer-term notes. By using the loans to pay current bills, the company could improve near-term cash flow.

    Borders has lagged in the transition to electronic publishing, compared to larger rivals Barnes and Noble (NYSE: BKS) and Amazon.com (Nasdaq: AMZN). It was late in creating its own online web presence, with Amazon fronting Borders web store until 2008. It doesn't have a hot e-book reader like the Kindle or Nook. Revenue has declined in each of its last five years.

    One of the most intriguing aspects of the GE Capital arrangement is the way GE is acting like a bankruptcy court, minus the due process. It dictates how Borders and its creditors must act if the loan is to be approved, including actions typically undertaken in a forced restructuring, like closing stores, arranging debtor-in-possession financing, and negotiating with vendors, landlords, and lenders.

    While all of GE Capital's requirements seem like reasonable actions to keep the company viable, initial response from Borders' creditors has been lukewarm at best. If you were thinking about doing a little bottom-fishing in BGP stock, you might want to wait until GE has actually made the loan. And keep reading that fine print, however cryptic it may be.

    http://www.fool.com/investing/general/2011/02/04/borders-gift-from-ge-some-assembly-required.aspx
     
  23. LordThanos1969

    LordThanos1969 Forum Resident

    Location:
    Phoenix, AZ, USA
    It sounds like whenever Borders gets any kind of good news, there is bad news right behind it. I think it would take a tremendous effort and quite a bit of good luck for Borders to avoid bankruptcy. It must be only a matter of time before the mass store closings start.

    I always thought the idea of Amazon fronting a Web site for Borders was crazy. I remember the Borders.com prior to agreement with Amazon. They had their chance and blew it.
     
  24. GregK

    GregK I'm speechless

    Location:
    Baltimore, MD
  25. Robin L

    Robin L Musical Omnivore

    Location:
    Fresno, California
    I was about to post that article. Very interesting "Thought Piece" concerning the blowback if Borders goes under and why it's so important for relators and publishers to keep Borders on life support:

    ANALYSIS: Borders facing critical real estate decisions on future of stores across U.S. . . .

    . . . LANDLORDS HOPEFUL

    Owners of the Ann Arbor area stores did not return calls seeking comment for this story. But they’ve watched Borders try to reposition its business for years. Agree Realty, for one, has been diversifying its portfolio, which now includes 13 Borders leases.

    Nationally, at least 13 Borders stores are listed for sale.

    The listings detail part of the Borders story: The properties are all 20,000 square feet or more in size, except for one small store in Las Vegas, and many tout the duration of the leases.

    Many have prices that signal a high degree of investor risk.

    Two, each of which were developed by Kimco Realty Trust, are listed for prices that reflect a capitalization rate - or rate of return based on the net operating income - around 8 percent.

    One of those is in Canton Township, next to Ikea. James, the listing agent, said that alone makes the property valuable beyond what happens with the Borders lease.

    Borders, Miller said, has been known for picking prime retail locations in the best properties.

    “Borders has exceptional real estate,” he said. “They’ve been disciplined about taking the best locations in the marketplace.”

    That bodes well for landlords, and ultimately communities. It’s also part of the long history of the local company that became a national name.

    “Borders was thought of as a great company not just by the general public, but by development companies,” Miller said. “It was a coup to have a Borders come into your property.” . . .​
     
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