WhoWhatWhereWHY -- Borders without books?
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The start of the new year finds Borders, the nation's second-largest book chain, on the financial ropes with implications that could affect all parts of the publishing business, including readers.
The chain, based in Ann Arbor, Mich., is hunting solutions including more financing this week in New York to stay afloat, company spokeswoman Mary Davis said Monday.
According to the trade publication Publishers Weekly, Borders has lined up refinancing, but needs to reach accommodations with publishers and other suppliers who have not been paid for book shipments in December.
After a poor showing in 2010, Borders Group Inc. last week announced it was suspending those payments. In response, a handful of suppliers including distributor National Book Network and publisher Rowan and Littlefield halted deliveries to the chain's stores.
The actions then caused Borders' stock to fall below $1 a share on the New York Stock Exchange.
Third-quarter sales at Borders fell 17.6 percent over the same period in 2009, and it reported losses for the year at nearly $75 million, almost double the 2009 mark. As losses mounted last year, the company laid off 10 percent of its management force and planned to close 16 stores.
Tough competition from both Barnes & Noble, the largest chain, and Amazon.com, the online bookseller, took its toll on Borders, which has been unable to compete in the growing e-book reader market against B&N's Nook and Amazon's Kindle.
In addition, B&N reported a 9.7 percent sales increase over the holidays including a record for Dec. 23.
Borders' plight comes just as publishers are releasing their crop of new titles for 2011 and readers are counting those gift cards in their Christmas stockings to buy books.
If the chain closes within six months, the action will cut into the sales of thousands of books and could leave gift card holders with worthless plastic.
There are about 500 Borders' outlets in the United States and nearly 170 airport and Waldenbooks stores as part of the chain. The loss of that many stores would be devastating to authors and publishers alike.
According to the publishing blog Publishers Lunch, which first reported Borders' failure to pay its vendors, the six leading American suppliers each do between $30 million to $40 million in business with the chain.
First Published January 4, 2011 12:00 am