Borders Group
Encyclopedia
Borders Group, Inc. was an international book and music retailer based in Ann Arbor, Michigan
. The company employed approximately 19,500 throughout the U.S., primarily in its Borders and Waldenbooks stores.
As of January 30, 2010, the company operated 511 Borders superstores in the world, including 508 in the U.S. and three in Puerto Rico. The company also operated 175 stores in the Waldenbooks Specialty Retail segment, including Waldenbooks
, Borders Express, Borders airport stores, and Borders Outlet stores.
Borders Group formerly operated stores in Australia
, New Zealand
and Singapore
. However, these were sold off to Pacific Equity Partners
(which owned rival Angus & Robertson
) in 2008, then were later sold again to RedGroup Retail. The stores continued to operate under the Borders brand under the unaffiliated Borders Asia Pacific brand until RedGroup was placed into voluntary administration in February 2011; with the five New Zealand stores sold to the James Pascoe Group, and the Australian stores gradually shut down, with the last group to close by July 17.
On February 16, 2011, Borders applied for Chapter 11 bankruptcy protection and began liquidating 226 of its stores in the United States
. Despite an offer from the private-equity firm Najafi Companies, Borders was not able to find a buyer before its July 17 bidding deadline, and therefore began liquidating its remaining 399 retail outlets on July 22, with the last remaining stores closing their doors on Sunday, September 18, 2011. The Chapter 11 case was ultimately converted to Chapter 7
. As of October 14, 2011, the Borders.com website has been replaced by a redirect to the Barnes & Noble
website, effectively shutting down Borders.com entirely.
The original Borders bookstore was located in Ann Arbor, Michigan
, where it was founded in 1971 by brothers Tom and Louis Borders during their undergraduate and graduate years at the University of Michigan
. The Borders brothers' inventory system tailored each store's offerings to its community. A sister company, Book Inventory Systems (BIS) (1976–1994), was founded to serve as a wholesaler for and provide the brothers' custom inventory system to regional independent bookstore
s such as John Rollins, Thackeray's, Schuler Books
, and Joseph-Beth Booksellers
. Former Hickory Farms
president Robert F. DiRomualdo was hired in 1989 to expand the company.
The first Borders bookshop, with a meager stock of used books, was located in two rooms above 209 State Street, north of the State Theater. From there the brothers soon moved, briefly, to a tiny ground floor + mezzanine operation in the Maynard House apartment building, on the southwest corner of William and Maynard Streets.
In 1975 they bought out the stock of Wahr's, an 80-year-old bookstore that was ending business at 316 South State, and hired Michael Hildebrand and Harvey James Robin to stock it with rare books and manage the old shop. Hildebrand had managed Gibson's used and rare book department in East Lansing for years and Harvey Robin had been a local restorer of rare books, who moved his bindery upstairs.
Wahr's had been mainly a textbook and school supplies vendor, but the brothers did not deal in textbooks. They moved the retail bookshop to much larger quarters that had become available across State Street, in the former location of the Wagner & Son men's clothing store. The old shop was renamed Charing Cross Bookshop and Tom Frick was sent over from the new bookshop to help.
The chain's flagship store was in downtown Ann Arbor, Michigan
at the corner of Liberty and Maynard Streets, in the building once occupied by the now defunct Jacobson's Department Store. Although not the original location, it was still identified as "Borders #1."
, which had acquired mall-based book chain Waldenbooks
eight years earlier in 1984. Kmart had struggled with the book division, having first tinkered with the assortment and later with discounting. In the Borders acquisition, Kmart merged the two companies in hopes that the experienced Borders senior management could bail out floundering Waldenbooks. Instead, much of the Borders senior management team left the company, leaving behind an even larger and more unwieldy division for Kmart executives to handle on the heels of aggressive expansions by rivals Barnes & Noble
and Crown Books
. Facing its own fiscal problems and intense pressure from stockholders, Kmart spun off Borders in a highly structured stock-purchase plan. The newly formed company was initially called Borders-Walden Group and, by the end of the same year, renamed simply Borders Group.
, starting with a 50000 square feet (4,645.2 m²) retail store in Toronto. However, this was rejected for failing to meet Canadian ownership regulations for book retailers.
In 1997, the company established its first international store in Singapore
, occupying 32000 square feet (2,972.9 m²) in Wheelock Place
, Orchard Road
, which was then the largest bookstore there. It subsequently opened another 41 stores in the United Kingdom, Ireland
, Australia, and New Zealand, and bought 35 Books etc. stores throughout Britain from Philip and Richard Joseph.
In 1998, Borders (UK) Ltd.
was established as a Borders Group subsidiary and with its Borders and Books etc. After quickly becoming one of the country's leading booksellers, due to the fierce competition in the UK marketplace, a number of the Books etc. stores closed, and Borders (UK) Ltd. was sold in 2007 to a private equity investor.
On November 26, 2009, Borders (UK) Ltd was placed into administration, which is the equivalent to Chapter 11 bankruptcy protection in the US. At that time, the Borders bookshop chain in the UK started a closing down sale in all of its 45 stores. On
December 14, Borders UK converted to liquidation (which is equivalent to Chapter 7
in the US) and announced it was going out of business. All UK stores were closed by the end of the year.
In the third quarter of 2006, the Singapore
store emerged as the best performing among the entire group's 559 outlets, with the highest revenue generated per square foot. The highest-grossing location in US territory is a recently remodeled and expanded store in Puerto Rico
.
By the end of 2009, all of Borders directly owned overseas locations had been sold or closed, leaving only the franchise stores in Dubai, Oman and Malaysia.
In April 2005, Borders Group opened its first franchise store with Malaysia's Berjaya Books Sdn. Bhd.
in Kuala Lumpur
. It is located in Berjaya Times Square
, which is the world's biggest mall built in a single phase, with 7,500,000 square feet (700,000 m²). The store in Berjaya Times Square was advertised as being the world's biggest Borders at 60,000 square feet (5,600 m²); however, this has since changed with the closure of one level of the store. Borders' second store in Malaysia is located in The Curve, Mutiara Damansara
. The third Borders store opened in Queensbay Mall
, Penang
on 7 December 2006. Borders opened a franchise store in Mall of the Emirates in Dubai, UAE in October 2006. Despite financial difficulties in the domestic market, Borders continued to expand its franchises, adding stores in Malaysia, Oman
and Sharjah.
In 2004, Borders reached an agreement with Starbucks
subsidiary Seattle's Best Coffee
to operate cafes in its domestic superstores under the Seattle's Best brand name.
In March 2007, Borders Group announced it would scale down the number of Waldenbooks outlets it had by half, to about 300, in the next year.
Also in March 2007, Borders Group announced the disposal of its UK and Ireland businesses including its Books etc. Business in the UK, with the aim of revitalizing the core U.S. business; however, it was also announced that Borders Group would retain the Paperchase
Stationery Business. International expansion would be likely to continue via franchising.
In September 2007, it was announced the UK and Ireland business of 42 Borders Stores and 28 Books etc. stores had been sold to private equity group Risk Capital Partners for an initial £20m. However after changing hands in 2009, Borders in the UK and Ireland went into administration on 26 November 2009. After failing to find a buyer, all the stores were shut on December 22, 2009.
In 2008, Borders opened 14 concept stores nationwide, which included a Digital Center, offering select electronic devices such as MP3 players, digital photo frames, and the Sony Reader
. The concept stores are located in Ann Arbor, Michigan
, Denver, Colorado
, Las Vegas, Nevada
, Panama City Beach, Florida
, and Noblesville, Indiana
and Alameda, California
. The latest Borders Digital Center opened in Alameda, California
in May 2008.
In late 2007, Borders installed digital video monitors in select stores. The monitors display special programs, as well as news, sports, and financial information provided through Ripple Networks, Inc., a California-based marketing service.
Borders Group also launched a customer appreciation program called "Borders Rewards." In contrast to a membership from Barnes & Noble, which was a paid-for membership that entitled customers to discounts, Borders Rewards was a free program with discount coupons and the ability to earn store credit for purchases. In addition, in September 2009, following the lead of Barnes & Noble, the chain discontinued its fee-based wireless service provided by T-Mobile, and began implementing a free wifi network provided by Verizon.
The Australian, New Zealand, and Singaporean stores were sold in June 2008 to Pacific Equity Partners
(who also own local competitor Angus & Robertson
), which then formed a new company, RedGroup Retail, to pay off debt.
In March 2008, Borders Group announced the intention to sell the chain because of financial difficulties. There were rumors that Borders Books approached Barnes and Noble in hopes of a buyout. The chain was in debt
, having increased its financial instability by borrowing $42.5 million USD in March from Pershing Square Capital Management
, the company's major stockholder, to keep the company running through the remainder of the fiscal year. The loan was said to have a very high interest rate
of 12.5%, which meant that the chain would have to post a significant profit
to stay afloat in the future. Following the announcement of the loan, Borders' shares dropped 28.6% to $5.07/share. The shares continued to drop throughout the year, and as of December 11, 2009, Borders stocks were trading at $1.30 on the NYSE, which was up almost a point from a low of $0.530 on January 28, 2009.
Later in 2008, the company announced that its marketing alliance with Amazon.com
would end (Amazon had been essentially acting as Borders' online component) and subsequently launched its own web sales site.
Also in 2008, Borders signed an agreement with Lulu Press to create "Borders Personal Publishing." Through this, authors could self-publish their work through Borders and its website, and it is all "powered by Lulu."
On January 5, 2009, the company announced that Ron Marshall would take over as chief executive, effective immediately. Former CEO George L. Jones received a severance package
of $2.09 million. Mark Bierley was also promoted to chief financial officer, replacing Ed Wilhelm. The changes in management were due to Borders' holiday sales having fallen by 11.7 percent to $868.8 million. On January 13, Mick McGuire, a former partner at Pershing Square, became Chairman of the Board of Directors.
On March 30, 2009, Marshall announced that the loan from Pershing Square would be extended for another year (coming due on April 1, 2010), at an interest rate of 9.8%. This, combined with a recent series of layoffs and new promotional deals with major publishers, caused Borders stock to rise. Within a week, it had topped the $1.00 mark. By mid-April it had approached $2.00. As a result, the company canceled plans to ask its shareholders for permission to perform a reverse stock split
.
On August 11, 2009, Borders revealed the names of the replacements for five of the eight members of the Board of Directors, who had previously announced their intentions to quit. The new members included Paul J. Brown of Hilton Hotels
, Timothy V. Wolf of MillerCoors
, and Dan Rose of Facebook
.
On November 5, 2009, Borders announced that it would close some of its Waldenbooks stores in an effort to improve the profitability of its Specialty Retail operations. By January 2010, 182 stores had been closed.
Holiday sales figures for 2009 were "disappointing", with total sales of $846.8 million, down 14.7% from the previous year. Employees reported that major cuts were made in payroll hours.
On January 26, 2010, CEO Ron Marshall resigned to become President and CEO of The Great Atlantic & Pacific Tea Co. (A&P), a position which had been vacant since October. Following his announcement, Borders stock fell below one dollar per share. During his tenure at Borders, all of the top executive officers resigned (or were encouraged to leave), including some who had been with the company for over twenty years. Mike Edwards (Vice-President and Chief Merchandising Officer) was appointed interim CEO.
On March 31, Borders announced that the loan from Pershing Square had been paid in full. In early April the company's stock had rebounded to $2.78 per share.
On May 21, it was revealed that Bennett S. LeBow
, Chairman of Vector Group
, was making a large private investment in Borders stock. As a result, he and Howard Lorber
, President and CEO of Vector Group, joined the Board of Directors. Following the resignation of Chairman Mick McGuire, LeBow was immediately elected Chairman of the Board. On June 3, LeBow became CEO of Borders Group. Mike Edwards was confirmed as President of Borders Group and CEO of Borders, Inc., the company's principal subsidiary.
The company reported significant losses for the third quarter, compared to 2009. At the end of 2010, Business Week and BBC News
reported that Borders would be delaying its payments to publishers for inventory already received, in order to preserve liquidity. This was prompted by problems in refinancing its credit facilities.
and closing of 226 stores. Two private-equity firms, The Gores Group
and Najafi Companies, expressed interest in purchasing half of the remaining Borders Group stores.
Borders Group announced on July 1, 2011, that it had found a bidder, Direct Brands, that would acquire the assets for $215 million and the assumption of $220 million in debt.
A group of Borders creditors rejected the Direct Brands takeover bid in July 2011. Borders filed for an auction and the motion was approved by a judge; however, the bid deadline expired on July 17 without a bidder. A United States bankruptcy judge approved a petition to liquidate. On July 22, 2011 Borders started closing its remaining 399 stores with a phased roll-out. Business operations ceased in September 2011. Former rival and the current second-largest chain of bookstores in the United States
, Books-A-Million
, had made a bid to acquire 30-35 stores and their assets on July 19, 2011, the day liquidation was approved by the courts. The two sides, however, were unable to come to an agreement suitable to all parties.
Books-A-Million later resurrected its offer to buy portions of Borders Group, purchasing the leases for 14 stores in primarily New England and Pennsylvania.
Borders USA closed the doors of its final remaining stores on Sunday, September 18, 2011. The last remaining Singaporean Borders store in Parkway Parade Shopping Center, closed its doors at 9pm (Singapore Time) after a final sale on Monday, September 26, 2011. However, there are still international Borders stores operating in The United Arab Emirates, Oman
, Malaysia and New Zealand
. These Borders stores are now under different ownership from the original Borders Group, and were unaffected by their store closures. The Borders online store closed on September 27, 2011 at 10:30 pm Eastern/9:30 pm Central. A banner now appears on their website allowing users to browse but directing them to Barnes & Noble to complete their purchases. All Borders customers have until October 29th to prevent their personal contact and purchase information from being transferred to Barnes & Noble. On October 1, Borders cardholders were informed by email: "As part of Borders ceasing operations, we [Barnes & Noble] acquired some of its assets including Borders brand trademarks and their customer list. The federal bankruptcy court approved this sale on September 26, 2011."
On June 3, 2011, the Borders eReader apps were changed to Kobo eReader
apps and users could transfer their Borders eBooks to their Kobo library.
Ann Arbor, Michigan
Ann Arbor is a city in the U.S. state of Michigan and the county seat of Washtenaw County. The 2010 census places the population at 113,934, making it the sixth largest city in Michigan. The Ann Arbor Metropolitan Statistical Area had a population of 344,791 as of 2010...
. The company employed approximately 19,500 throughout the U.S., primarily in its Borders and Waldenbooks stores.
As of January 30, 2010, the company operated 511 Borders superstores in the world, including 508 in the U.S. and three in Puerto Rico. The company also operated 175 stores in the Waldenbooks Specialty Retail segment, including Waldenbooks
Waldenbooks
Waldenbooks , operated by the Walden Book Company, Inc., was an American shopping mall-based bookstore chain and a subsidiary of Borders Group. The chain also ran a video game and software chain under the name Waldensoftware as well as a children's edutainment chain under Walden Kids...
, Borders Express, Borders airport stores, and Borders Outlet stores.
Borders Group formerly operated stores in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
and Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
. However, these were sold off to Pacific Equity Partners
Pacific Equity Partners
Pacific Equity Partners is a private equity investment firm focusing on leveraged buyout and growth capital transactions primarily in Australia and New Zealand...
(which owned rival Angus & Robertson
Angus & Robertson
Angus & Robertson is a bookstore chain in Australia. Its first bookstore was opened in 110½ Market Street, Sydney by Scotsman David Angus in 1884; it sold second-hand books. In 1886, he went into partnership with fellow Scot, George Robertson with whom he had worked earlier.- Bookselling history...
) in 2008, then were later sold again to RedGroup Retail. The stores continued to operate under the Borders brand under the unaffiliated Borders Asia Pacific brand until RedGroup was placed into voluntary administration in February 2011; with the five New Zealand stores sold to the James Pascoe Group, and the Australian stores gradually shut down, with the last group to close by July 17.
On February 16, 2011, Borders applied for Chapter 11 bankruptcy protection and began liquidating 226 of its stores in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Despite an offer from the private-equity firm Najafi Companies, Borders was not able to find a buyer before its July 17 bidding deadline, and therefore began liquidating its remaining 399 retail outlets on July 22, with the last remaining stores closing their doors on Sunday, September 18, 2011. The Chapter 11 case was ultimately converted to Chapter 7
Chapter 7, Title 11, United States Code
Chapter 7 of the Title 11 of the United States Code governs the process of liquidation under the bankruptcy laws of the United States...
. As of October 14, 2011, the Borders.com website has been replaced by a redirect to the Barnes & Noble
Barnes & Noble
Barnes & Noble, Inc. is the largest book retailer in the United States, operating mainly through its Barnes & Noble Booksellers chain of bookstores headquartered at 122 Fifth Avenue in the Flatiron District in Manhattan in New York City. Barnes & Noble also operated the chain of small B. Dalton...
website, effectively shutting down Borders.com entirely.
History
Ann Arbor, Michigan
Ann Arbor is a city in the U.S. state of Michigan and the county seat of Washtenaw County. The 2010 census places the population at 113,934, making it the sixth largest city in Michigan. The Ann Arbor Metropolitan Statistical Area had a population of 344,791 as of 2010...
, where it was founded in 1971 by brothers Tom and Louis Borders during their undergraduate and graduate years at the University of Michigan
University of Michigan
The University of Michigan is a public research university located in Ann Arbor, Michigan in the United States. It is the state's oldest university and the flagship campus of the University of Michigan...
. The Borders brothers' inventory system tailored each store's offerings to its community. A sister company, Book Inventory Systems (BIS) (1976–1994), was founded to serve as a wholesaler for and provide the brothers' custom inventory system to regional independent bookstore
Independent bookstore
An independent bookstore is a retail bookstore which is independently owned.-Literary and countercultural history:Author events at independent bookstores sometimes take the role of literary salons. The bookstores themselves, "have historically supported and cultivated the work of independent...
s such as John Rollins, Thackeray's, Schuler Books
Schuler Books & Music
Schuler Books & Music, formerly known as simply Schuler Books, is a small Michigan chain of bookstores. Along with books, DVDs, and music CDs, the stores also sell food and beverages at its in store cafes. Founded in 1982, it has since become one of the largest independent bookstores in the nation...
, and Joseph-Beth Booksellers
Joseph-Beth Booksellers
Joseph-Beth Booksellers is an independent bookseller with three stores in the United States. It formerly operated a total of seven under the Joseph-Beth name and two under the Davis-Kidd Booksellers name. The name "Joseph-Beth" derives from the middle names of its two founders, Neil and Mary Beth...
. Former Hickory Farms
Hickory Farms
Hickory Farms is an American specialty foods company based in Maumee, Ohio. The company was established in 1951 when founder Richard Ransom began selling hand cut cheese at local fairs. By 1959, the company added summer sausage and opened their first retail store outside Toledo, Ohio...
president Robert F. DiRomualdo was hired in 1989 to expand the company.
The first Borders bookshop, with a meager stock of used books, was located in two rooms above 209 State Street, north of the State Theater. From there the brothers soon moved, briefly, to a tiny ground floor + mezzanine operation in the Maynard House apartment building, on the southwest corner of William and Maynard Streets.
In 1975 they bought out the stock of Wahr's, an 80-year-old bookstore that was ending business at 316 South State, and hired Michael Hildebrand and Harvey James Robin to stock it with rare books and manage the old shop. Hildebrand had managed Gibson's used and rare book department in East Lansing for years and Harvey Robin had been a local restorer of rare books, who moved his bindery upstairs.
Wahr's had been mainly a textbook and school supplies vendor, but the brothers did not deal in textbooks. They moved the retail bookshop to much larger quarters that had become available across State Street, in the former location of the Wagner & Son men's clothing store. The old shop was renamed Charing Cross Bookshop and Tom Frick was sent over from the new bookshop to help.
The chain's flagship store was in downtown Ann Arbor, Michigan
Ann Arbor, Michigan
Ann Arbor is a city in the U.S. state of Michigan and the county seat of Washtenaw County. The 2010 census places the population at 113,934, making it the sixth largest city in Michigan. The Ann Arbor Metropolitan Statistical Area had a population of 344,791 as of 2010...
at the corner of Liberty and Maynard Streets, in the building once occupied by the now defunct Jacobson's Department Store. Although not the original location, it was still identified as "Borders #1."
Kmart and Waldenbooks
Borders was acquired in 1992 by KmartKmart
Kmart, sometimes styled as "K-Mart," is a chain of discount department stores. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-Mart and...
, which had acquired mall-based book chain Waldenbooks
Waldenbooks
Waldenbooks , operated by the Walden Book Company, Inc., was an American shopping mall-based bookstore chain and a subsidiary of Borders Group. The chain also ran a video game and software chain under the name Waldensoftware as well as a children's edutainment chain under Walden Kids...
eight years earlier in 1984. Kmart had struggled with the book division, having first tinkered with the assortment and later with discounting. In the Borders acquisition, Kmart merged the two companies in hopes that the experienced Borders senior management could bail out floundering Waldenbooks. Instead, much of the Borders senior management team left the company, leaving behind an even larger and more unwieldy division for Kmart executives to handle on the heels of aggressive expansions by rivals Barnes & Noble
Barnes & Noble
Barnes & Noble, Inc. is the largest book retailer in the United States, operating mainly through its Barnes & Noble Booksellers chain of bookstores headquartered at 122 Fifth Avenue in the Flatiron District in Manhattan in New York City. Barnes & Noble also operated the chain of small B. Dalton...
and Crown Books
Crown Books
Crown Books Corporation was a bookseller headquartered in Lake Arbor, an unincorporated community in Prince George's County, Maryland, near Largo and Upper Marlboro. It was founded in the Washington, D.C., metro area by Robert Haft in 1977...
. Facing its own fiscal problems and intense pressure from stockholders, Kmart spun off Borders in a highly structured stock-purchase plan. The newly formed company was initially called Borders-Walden Group and, by the end of the same year, renamed simply Borders Group.
International expansion
Borders was slated to open stores in CanadaCanada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, starting with a 50000 square feet (4,645.2 m²) retail store in Toronto. However, this was rejected for failing to meet Canadian ownership regulations for book retailers.
In 1997, the company established its first international store in Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, occupying 32000 square feet (2,972.9 m²) in Wheelock Place
Wheelock Place
Wheelock Place , is a 21-floor office tower and shopping mall on Singapore's Orchard Road. The building was completed in 1994 as Lane Crawford Place , but closed down in the late 1990s due to the Asian financial crisis. The building was then renamed Wheelock Place, which its owner, Wheelock...
, Orchard Road
Orchard Road
Orchard Road is a road in Singapore that is the retail and entertainment hub of the city-state. It is regularly frequented by the local population as well as being a major tourist attraction...
, which was then the largest bookstore there. It subsequently opened another 41 stores in the United Kingdom, Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
, Australia, and New Zealand, and bought 35 Books etc. stores throughout Britain from Philip and Richard Joseph.
In 1998, Borders (UK) Ltd.
Borders (UK) Ltd.
Borders Ltd., aka Borders & Books etc, was established as a Borders Group subsidiary in 1998 and in 2007 became independent of the US company. At its peak after separation from the US parent, it traded from its 41 Borders and 28 BOOKS etc. shops, with over one million square feet of retail space...
was established as a Borders Group subsidiary and with its Borders and Books etc. After quickly becoming one of the country's leading booksellers, due to the fierce competition in the UK marketplace, a number of the Books etc. stores closed, and Borders (UK) Ltd. was sold in 2007 to a private equity investor.
On November 26, 2009, Borders (UK) Ltd was placed into administration, which is the equivalent to Chapter 11 bankruptcy protection in the US. At that time, the Borders bookshop chain in the UK started a closing down sale in all of its 45 stores. On
December 14, Borders UK converted to liquidation (which is equivalent to Chapter 7
Chapter 7, Title 11, United States Code
Chapter 7 of the Title 11 of the United States Code governs the process of liquidation under the bankruptcy laws of the United States...
in the US) and announced it was going out of business. All UK stores were closed by the end of the year.
In the third quarter of 2006, the Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
store emerged as the best performing among the entire group's 559 outlets, with the highest revenue generated per square foot. The highest-grossing location in US territory is a recently remodeled and expanded store in Puerto Rico
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...
.
By the end of 2009, all of Borders directly owned overseas locations had been sold or closed, leaving only the franchise stores in Dubai, Oman and Malaysia.
Franchise stores
Berjaya Group
-Corporate Profile:The Berjaya Corporation group of companies’ history dates back to 1984 when the Chairman, Tan Sri Dato’ Seri Vincent Tan Chee Yioun acquired a major controlling stake in Berjaya Industrial Berhad from the founders, Broken Hill Proprietary Ltd, Australia and National Iron & Steel...
in Kuala Lumpur
Kuala Lumpur
Kuala Lumpur is the capital and the second largest city in Malaysia by population. The city proper, making up an area of , has a population of 1.4 million as of 2010. Greater Kuala Lumpur, also known as the Klang Valley, is an urban agglomeration of 7.2 million...
. It is located in Berjaya Times Square
Berjaya Times Square
Berjaya Times Square Kuala Lumpur is a twin tower complex containing a shopping centre and five star hotel located in Kuala Lumpur, Malaysia. It was opened in October 2003 by the then Prime Minister of Malaysia, YAB Datuk Seri Dr Mahathir bin Mohamad...
, which is the world's biggest mall built in a single phase, with 7,500,000 square feet (700,000 m²). The store in Berjaya Times Square was advertised as being the world's biggest Borders at 60,000 square feet (5,600 m²); however, this has since changed with the closure of one level of the store. Borders' second store in Malaysia is located in The Curve, Mutiara Damansara
Mutiara Damansara
Mutiara Damansara is a township in Petaling Jaya, Selangor, Malaysia. It is developed by Mutiara Rini, a member of the Boustead Group.-Features:...
. The third Borders store opened in Queensbay Mall
Queensbay Mall
Queensbay Mall is a shopping mall situated in Penang, Malaysia. It is in the heart of the Queensbay development, formerly known as Bayan Bay before it was abandoned during the East Asian financial crisis. At that time, the mall was referred to as Bayan World Megamall...
, Penang
Penang
Penang is a state in Malaysia and the name of its constituent island, located on the northwest coast of Peninsular Malaysia by the Strait of Malacca. It is bordered by Kedah in the north and east, and Perak in the south. Penang is the second smallest Malaysian state in area after Perlis, and the...
on 7 December 2006. Borders opened a franchise store in Mall of the Emirates in Dubai, UAE in October 2006. Despite financial difficulties in the domestic market, Borders continued to expand its franchises, adding stores in Malaysia, Oman
Oman
Oman , officially called the Sultanate of Oman , is an Arab state in southwest Asia on the southeast coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the...
and Sharjah.
Changes in business plan
In 2003, Borders had 1,249 stores using the Borders and Waldenbooks names.In 2004, Borders reached an agreement with Starbucks
Starbucks
Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 17,009 stores in 55 countries, including over 11,000 in the United States, over 1,000 in Canada, over 700 in the United Kingdom, and...
subsidiary Seattle's Best Coffee
Seattle's Best Coffee
Seattle's Best Coffee, a wholly owned subsidiary of Starbucks, is a specialty coffee retailer and wholesaler based in Seattle, Washington.Seattle's Best Coffee has retail stores and grocery sub-stores in 20 states and provinces and the District of Columbia. Sub-stores can also be found within many...
to operate cafes in its domestic superstores under the Seattle's Best brand name.
In March 2007, Borders Group announced it would scale down the number of Waldenbooks outlets it had by half, to about 300, in the next year.
Also in March 2007, Borders Group announced the disposal of its UK and Ireland businesses including its Books etc. Business in the UK, with the aim of revitalizing the core U.S. business; however, it was also announced that Borders Group would retain the Paperchase
Paperchase (company)
Paperchase is an international chain of stationery stores which were established in the United Kingdom but have since expanded into the USA. As well as stand alone stores, there are Paperchase concessions in selected House of Fraser, Waterstones and Selfridges stores...
Stationery Business. International expansion would be likely to continue via franchising.
In September 2007, it was announced the UK and Ireland business of 42 Borders Stores and 28 Books etc. stores had been sold to private equity group Risk Capital Partners for an initial £20m. However after changing hands in 2009, Borders in the UK and Ireland went into administration on 26 November 2009. After failing to find a buyer, all the stores were shut on December 22, 2009.
In 2008, Borders opened 14 concept stores nationwide, which included a Digital Center, offering select electronic devices such as MP3 players, digital photo frames, and the Sony Reader
Sony Reader
The Sony Reader is a line of e-book readers manufactured by Sony. It uses an electronic paper display developed by E Ink Corporation, is viewable in direct sunlight, requires no power to maintain a static image, and is usable in portrait or landscape orientation.Sony sells e-books for the Reader...
. The concept stores are located in Ann Arbor, Michigan
Ann Arbor, Michigan
Ann Arbor is a city in the U.S. state of Michigan and the county seat of Washtenaw County. The 2010 census places the population at 113,934, making it the sixth largest city in Michigan. The Ann Arbor Metropolitan Statistical Area had a population of 344,791 as of 2010...
, Denver, Colorado
Denver, Colorado
The City and County of Denver is the capital and the most populous city of the U.S. state of Colorado. Denver is a consolidated city-county, located in the South Platte River Valley on the western edge of the High Plains just east of the Front Range of the Rocky Mountains...
, Las Vegas, Nevada
Las Vegas, Nevada
Las Vegas is the most populous city in the U.S. state of Nevada and is also the county seat of Clark County, Nevada. Las Vegas is an internationally renowned major resort city for gambling, shopping, and fine dining. The city bills itself as The Entertainment Capital of the World, and is famous...
, Panama City Beach, Florida
Panama City Beach, Florida
Panama City Beach is a city in Bay County, Florida, United States, on the Gulf of Mexico coast. The city is often referred to under the umbrella term of "Panama City", despite being a distinct municipality from the older and larger inland Panama City to the east, making Panama City and Panama City...
, and Noblesville, Indiana
Noblesville, Indiana
Noblesville is a city in and the county seat of Hamilton County, Indiana, United States, located just north of Indianapolis. The population was 51,969 at the 2010 census making it the 14th largest city/town in the state, up from 19th in 2007...
and Alameda, California
Alameda, California
Alameda is a city in Alameda County, California, United States. It is located on Alameda Island and Bay Farm Island, and is adjacent to Oakland in the San Francisco Bay. The Bay Farm Island portion of the city is adjacent to the Oakland International Airport. At the 2010 census, the city had a...
. The latest Borders Digital Center opened in Alameda, California
Alameda, California
Alameda is a city in Alameda County, California, United States. It is located on Alameda Island and Bay Farm Island, and is adjacent to Oakland in the San Francisco Bay. The Bay Farm Island portion of the city is adjacent to the Oakland International Airport. At the 2010 census, the city had a...
in May 2008.
In late 2007, Borders installed digital video monitors in select stores. The monitors display special programs, as well as news, sports, and financial information provided through Ripple Networks, Inc., a California-based marketing service.
Borders Group also launched a customer appreciation program called "Borders Rewards." In contrast to a membership from Barnes & Noble, which was a paid-for membership that entitled customers to discounts, Borders Rewards was a free program with discount coupons and the ability to earn store credit for purchases. In addition, in September 2009, following the lead of Barnes & Noble, the chain discontinued its fee-based wireless service provided by T-Mobile, and began implementing a free wifi network provided by Verizon.
The Australian, New Zealand, and Singaporean stores were sold in June 2008 to Pacific Equity Partners
Pacific Equity Partners
Pacific Equity Partners is a private equity investment firm focusing on leveraged buyout and growth capital transactions primarily in Australia and New Zealand...
(who also own local competitor Angus & Robertson
Angus & Robertson
Angus & Robertson is a bookstore chain in Australia. Its first bookstore was opened in 110½ Market Street, Sydney by Scotsman David Angus in 1884; it sold second-hand books. In 1886, he went into partnership with fellow Scot, George Robertson with whom he had worked earlier.- Bookselling history...
), which then formed a new company, RedGroup Retail, to pay off debt.
Declining profits
The last time Borders made a profit was 2006. Its yearly income dropped by $1 billion over the next four years.In March 2008, Borders Group announced the intention to sell the chain because of financial difficulties. There were rumors that Borders Books approached Barnes and Noble in hopes of a buyout. The chain was in debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
, having increased its financial instability by borrowing $42.5 million USD in March from Pershing Square Capital Management
William Ackman
William A. Ackman or commonly known as Bill Ackman is the major investor, founder and CEO of hedge fund Pershing Square Capital Management LP. At one point in December 2007 his funds owned a 10% stake in Target Corporation, valued at $4.2 billion through the purchase of stock and derivatives. His...
, the company's major stockholder, to keep the company running through the remainder of the fiscal year. The loan was said to have a very high interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
of 12.5%, which meant that the chain would have to post a significant profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
to stay afloat in the future. Following the announcement of the loan, Borders' shares dropped 28.6% to $5.07/share. The shares continued to drop throughout the year, and as of December 11, 2009, Borders stocks were trading at $1.30 on the NYSE, which was up almost a point from a low of $0.530 on January 28, 2009.
Later in 2008, the company announced that its marketing alliance with Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
would end (Amazon had been essentially acting as Borders' online component) and subsequently launched its own web sales site.
Also in 2008, Borders signed an agreement with Lulu Press to create "Borders Personal Publishing." Through this, authors could self-publish their work through Borders and its website, and it is all "powered by Lulu."
On January 5, 2009, the company announced that Ron Marshall would take over as chief executive, effective immediately. Former CEO George L. Jones received a severance package
Severance package
A severance package is pay and benefits an employee receives when they leave employment at a company. In addition to the employee's remaining regular pay, it may include some of the following:* An additional payment based on months of service...
of $2.09 million. Mark Bierley was also promoted to chief financial officer, replacing Ed Wilhelm. The changes in management were due to Borders' holiday sales having fallen by 11.7 percent to $868.8 million. On January 13, Mick McGuire, a former partner at Pershing Square, became Chairman of the Board of Directors.
On March 30, 2009, Marshall announced that the loan from Pershing Square would be extended for another year (coming due on April 1, 2010), at an interest rate of 9.8%. This, combined with a recent series of layoffs and new promotional deals with major publishers, caused Borders stock to rise. Within a week, it had topped the $1.00 mark. By mid-April it had approached $2.00. As a result, the company canceled plans to ask its shareholders for permission to perform a reverse stock split
Reverse stock split
On a stock exchange, a reverse stock split or reverse split is a process by a company of issuing to each shareholder in that company a smaller number of new shares in proportion to that shareholder's original shares that are subsequently canceled. A reverse stock split is also called a stock merge...
.
On August 11, 2009, Borders revealed the names of the replacements for five of the eight members of the Board of Directors, who had previously announced their intentions to quit. The new members included Paul J. Brown of Hilton Hotels
Hilton Hotels
Hilton Hotels & Resorts is an international chain of full-service hotels and resorts founded by Conrad Hilton and now owned by Hilton Worldwide. Hilton hotels are either owned by, managed by, or franchised to independent operators by Hilton Worldwide. Hilton Hotels became the first coast-to-coast...
, Timothy V. Wolf of MillerCoors
MillerCoors
MillerCoors is a joint venture between SABMiller and Molson Coors Brewing Company, announced on October 9, 2007. The joint venture has the responsibility of selling brands such as Miller Lite, Miller High Life, Miller Genuine Draft, Coors, Coors Light, Molson Canadian, and Blue Moon in the United...
, and Dan Rose of Facebook
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
.
On November 5, 2009, Borders announced that it would close some of its Waldenbooks stores in an effort to improve the profitability of its Specialty Retail operations. By January 2010, 182 stores had been closed.
Holiday sales figures for 2009 were "disappointing", with total sales of $846.8 million, down 14.7% from the previous year. Employees reported that major cuts were made in payroll hours.
On January 26, 2010, CEO Ron Marshall resigned to become President and CEO of The Great Atlantic & Pacific Tea Co. (A&P), a position which had been vacant since October. Following his announcement, Borders stock fell below one dollar per share. During his tenure at Borders, all of the top executive officers resigned (or were encouraged to leave), including some who had been with the company for over twenty years. Mike Edwards (Vice-President and Chief Merchandising Officer) was appointed interim CEO.
On March 31, Borders announced that the loan from Pershing Square had been paid in full. In early April the company's stock had rebounded to $2.78 per share.
On May 21, it was revealed that Bennett S. LeBow
Bennett S. LeBow
Bennett S. LeBow is a financier and corporate raider. He is also the former Chairman of the Board and CEO of Borders Group, an international bookseller based in Ann Arbor, Michigan and Chairman of the Board of Vector Group, a holding company primarily involved in the manufacturing of cigarette...
, Chairman of Vector Group
Vector Group
Vector Group Ltd. is a Miami, Florida-based, publicly traded holding company founded by its Chairman, Bennett S. LeBow. Howard Lorber serves as President and Chief Executive Officer of Vector Group Ltd.. The company is headquartered in the Miami Tower in Downtown Miami.The company's holdings...
, was making a large private investment in Borders stock. As a result, he and Howard Lorber
Howard Lorber
Howard Mark Lorber is the President and CEO of Vector Group Ltd., a holding company listed on the New York Stock Exchange. He is also the Chairman of Douglas Elliman, a subsidiary of Vector Group, which is the largest residential real estate brokerage in the New York metropolitan area. He is also...
, President and CEO of Vector Group, joined the Board of Directors. Following the resignation of Chairman Mick McGuire, LeBow was immediately elected Chairman of the Board. On June 3, LeBow became CEO of Borders Group. Mike Edwards was confirmed as President of Borders Group and CEO of Borders, Inc., the company's principal subsidiary.
The company reported significant losses for the third quarter, compared to 2009. At the end of 2010, Business Week and BBC News
BBC News
BBC News is the department of the British Broadcasting Corporation responsible for the gathering and broadcasting of news and current affairs. The department is the world's largest broadcast news organisation and generates about 120 hours of radio and television output each day, as well as online...
reported that Borders would be delaying its payments to publishers for inventory already received, in order to preserve liquidity. This was prompted by problems in refinancing its credit facilities.
Bankruptcy and liquidation
On February 16, 2011, the company announced that it had filed for Chapter 11 bankruptcy protection, listing $1.275 billion in assets and $1.293 billion in debts in its filing. The company also announced the liquidationLiquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
and closing of 226 stores. Two private-equity firms, The Gores Group
The Gores Group
The Gores Group, founded by Alec E. Gores, is a private equity firm focused on acquiring controlling interests in mature and growing businesses....
and Najafi Companies, expressed interest in purchasing half of the remaining Borders Group stores.
Borders Group announced on July 1, 2011, that it had found a bidder, Direct Brands, that would acquire the assets for $215 million and the assumption of $220 million in debt.
A group of Borders creditors rejected the Direct Brands takeover bid in July 2011. Borders filed for an auction and the motion was approved by a judge; however, the bid deadline expired on July 17 without a bidder. A United States bankruptcy judge approved a petition to liquidate. On July 22, 2011 Borders started closing its remaining 399 stores with a phased roll-out. Business operations ceased in September 2011. Former rival and the current second-largest chain of bookstores in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Books-A-Million
Books-A-Million
Books-A-Million, Inc., also known as BAM!, is a company that owns the second largest U.S. bookstore chain and is headquartered in Birmingham, Alabama. The company operates over 200 stores in the South, Midwest, Northeast...
, had made a bid to acquire 30-35 stores and their assets on July 19, 2011, the day liquidation was approved by the courts. The two sides, however, were unable to come to an agreement suitable to all parties.
Books-A-Million later resurrected its offer to buy portions of Borders Group, purchasing the leases for 14 stores in primarily New England and Pennsylvania.
Borders USA closed the doors of its final remaining stores on Sunday, September 18, 2011. The last remaining Singaporean Borders store in Parkway Parade Shopping Center, closed its doors at 9pm (Singapore Time) after a final sale on Monday, September 26, 2011. However, there are still international Borders stores operating in The United Arab Emirates, Oman
Oman
Oman , officially called the Sultanate of Oman , is an Arab state in southwest Asia on the southeast coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the...
, Malaysia and New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
. These Borders stores are now under different ownership from the original Borders Group, and were unaffected by their store closures. The Borders online store closed on September 27, 2011 at 10:30 pm Eastern/9:30 pm Central. A banner now appears on their website allowing users to browse but directing them to Barnes & Noble to complete their purchases. All Borders customers have until October 29th to prevent their personal contact and purchase information from being transferred to Barnes & Noble. On October 1, Borders cardholders were informed by email: "As part of Borders ceasing operations, we [Barnes & Noble] acquired some of its assets including Borders brand trademarks and their customer list. The federal bankruptcy court approved this sale on September 26, 2011."
eBook store
On July 7, 2010, Borders opened an eBook store to allow books to be directly downloaded to an e-reader device or a Borders eReader app for the desktop, iPhone, iPad, BlackBerry, or Android. Though branded as Borders's store, it was actually handled by Kobo, Inc.On June 3, 2011, the Borders eReader apps were changed to Kobo eReader
Kobo eReader
The Kobo eReader is an e-book reader produced by Toronto-based company Kobo Inc. The original version was released in July 2010 and was marketed as a minimalist alternative to the more expensive e-book readers available at the time. , fifty-eight percent of Kobo Inc is owned by Indigo Books & Music...
apps and users could transfer their Borders eBooks to their Kobo library.
External links
- Paperchase, a former Borders Group subsidiary
- Borders Analysis on Wikinvest