Borders seeks to liquidate
NEW YORK (AP) – There will be no storybook ending for Borders. The 40-year-old book seller could start liquidating its 399 remaining stores as early as Friday.
The Ann Arbor, Mich.-based chain, which helped pioneer the big-box bookseller concept, is seeking court approval to liquidate its stores after it failed to receive any bids that would keep it in business. The move adds Borders to the list of retailers that have failed to survive the economic downturn.
Borders is expected to ask a judge to approve a sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. Liquidation sales could start as soon as Friday if the U.S. Bankruptcy Court of the Southern District of New York approves the move at a scheduled hearing on Thursday. The company is expected to go out of business by the end of September.
Borders’ attempt to stay in business unraveled quickly last week, after a $215 million “white knight” bid by private-equity firm Najafi Cos. dissolved under objections from creditors and lenders. They argued the chain would be worth more if it liquidated immediately.
“We were all working hard toward a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, e-reader revolution, and turbulent economy, have brought us to where we are now,” said Borders Group President Mike Edwards in a statement.
Simba Information senior trade analyst Michael Norris said a Borders liquidation could have far-reaching effects, putting thousands of people out of work at a time of high unemployment, particularly in Michigan where Borders is based. The chain, which has been shrinking in recent years, currently has 10,700 employees.
Norris predicts the closing also could cause sales of electronic books to fall. Borders entered the electronic book market with Canada’s Kobo Inc. last year. Owners of the Kobo e-reader will still be able use Kobo software to buy and read books. And Kobo officials said users of Borders e-book accounts, which began transitioning to Kobo in June, will be able to access their e-books uninterrupted.
“Bookstore employees don’t just sell books, they sell the activity of reading, and this decision throws thousands of them out of work,” he said. “This industry is going to slowly figure out that a lot of e-book readers still use bookstores all the time to discover what’s new before heading home to buy it for their e-reading device.”
The loss of Borders stores will also deal a blow to malls nationwide, according to real estate sources.
Borders’ move to close 228 stores while it reorganized in bankruptcy protection already increased the collective vacancy rate of shopping centers that contained a Borders to 9.3 percent from 4.2 percent, estimated Chris Macke, senior real estate strategist at CoStar Group, the nation’s largest provider of real estate data. Macke calculated the liquidation of the rest of the chain could increase the vacancy rate on that same basis to 18.8 percent. Borders stores average about 25,000 square feet, about half the size of a football field.
But perhaps the biggest impact of Borders going out of business will be to the consumer. Asia Lyons, 32, was at a loss Monday when she learned she would have to find somewhere new to shop for books. The New Yorker, a manager at Starbucks, buys 50 to 100 books a year for her and her daughter and usually buys them at the Borders near Penn Station.