When RED Group, the owner of Angus & Robertson and Borders locally and Whitcoulls in New Zealand (amounting to about 260 shops), opted on Thursday for voluntary administration, it blamed increasing online sales and Australia's territorial copyright laws for its problems.
Borders plans to operate normally and honour gift cards and its loyalty program as it reorganises. But it is left to be seen how this will get managed
Borders, whose market value has shrunk by more than $3 billion since 1998, racked up losses by failing to adapt to shifts in how consumers shop
Well-known literary gent Jerry Seinfeld summed up the importance of bookshops. ''A bookstore,'' he said, ''is one of the only pieces of evidence we have that people are still thinking.'' Now the people who run them will have to do the thinking.
Australian book chains Borders, Angus & Robertson and the Whitcoulls chain of newsagencies in New Zealand have been placed into voluntary administration by its private equity owners only a day after the Borders company in the US also collapsed
The 40-year-old company “Borders” plans to close about 200 of its 642 stores over the next few weeks. All of the stores closed will be superstores. Clearance sales have begun this weekend, according to documents filed with the US Bankruptcy Court in New York. Borders said it is losing about $US2 million ($A2.01 million) a day at the stores it plans to close
According to US Borders Store Accounts revealed
According to the Chapter 11 filing, Borders had $US1.28 billion ($A1.29 billion) in assets and $US1.29 billion ($A1.3 billion) in debts as of Dec. 25.
It owes tens of millions of dollars to publishers, including $US41.1 million ($A41.37 million) to Penguin Putnam, $US36.9 million ($A37.14 million) to Hachette Book Group, $US33.8 million ($A34.02 million) to Simon & Schuster and $US33.5 million ($A33.72 million) to Random House.
Borders' rival Barnes & Noble, which has 29.8 per cent of the book market compared with Borders' 14.3 per cent according to IBIS World, has done better by adapting to e-commerce and electronic books more quickly and keeping management stable.
In other news in the US :
Movie rental chain Blockbuster Inc. may be running out of cash or might liquidate, if papers filed last night by the landlords for 38 stores are correct. Or, Blockbuster may be on the cusp of another round of store closings. Blockbuster filed an operating report for five weeks ended Jan. 1 showing a $26.1 million operating loss on total revenue of $206.5 million.
Blockbuster filed under Chapter 11 after negotiating the outline of a debt-for-equity swap with holders of 80 percent of the $630 million in 11.75 percent senior-secured notes. The plan and accompanying disclosure statement are yet to be filed.
After bankruptcy, Blockbuster rejected approximately 220 leases for stores previously closing. Blockbuster said it would close 72 additional stores by the end of 2010 and another approximately 110 in the first quarter of 2011.