Back in 2000, Borders Books (the company I’ve worked for since 1997) tried to get someone to buy them. Coming off many late 90's blunders -including its too late entry into the internet e-business - it seemed ripe for sale, or even a take-over. But when no one seemed interested, the company took itself off the sales block and has tried for 8 years to pick itself up.
However, it seems the company cannot escape its past. This past week, Borders announced that they are seeking “strategic alternatives” in hopes of staving off liquidation. Those options could include sale of the company and/or some of its divisions. The company has hired J.P. Morgan Securities and Merrill Lynch to aide them.
To help prevent liquidity, Borders received some financial commitment from Pershing Square Capital Management (who already have a 10% stake within Borders already) of some $42.5 million (at a whopping, staggering, unbelievable 12.5% interest). Pershing will also have the ability to purchase some of the Borders international business.
This will, essentially, keep the company going through 2008.
And asked why CEO George Jones decided to look for other options after receiving the funding from Pershing, he told analysts on Thursday that the company is looking to maximize shareholder value, and one beneficial aspect might be to sell the company.
As of now, the company is reducing cost across the board, mostly by to reducing inventory (and discontinuing all of the perks on the retail level) while trying to improve inventory turns, which is means, essentially, the stores will be stocked more with stuff that has sold in the past. Essentially, will have a high inventory of, say the Oprah bookclub book New Earth, while lower inventory on new titles from unestablished authors. Since New Earth is selling, and we continue to pump up its inventory, this comes across to potential investors as a “turn” of inventory. It’s smoke and mirrors, but I guess it keeps the company from going belly up.
Still, Borders does not listen to its customers. While most of the ones I encounter like us better (as in employees) than B&N, but they find our stores confusing and not very cozy. They like the staff because they’re knowledgeable and nice, but they don’t want to be bothered every 10 seconds by a staff member coming up to them and asking them if they need help.
The store set-ups are confusing and not user friendly.
And now, with the rapid deterioration of music sales, the company is opening concept stores that offer customers the ability to download music at the store. Of course, I’m unsure why someone would want to do this, considering they can do it at home. Something a customer recently pointed out to me. She thinks the new digital centers is lame and wants to come to Borders to but CD’s.
Spin is the name of the game and the company is already trying to figure out how to get them to come anyways. I’m ambivalent at best on how this will help.
I feel, in the end, Borders will attempt to sell off Walden Books (though I suspect they’ll eventually close these mall based stores) and probably the UK based Paperchase after that. It continues in search of a buyer for its Australian/New Zealand operation, after a recent talks collapsed.
It has, I believe, a year or so left if it cannot turn around sales. Of course, the economy plays a key factor here, also, as its certain it will be not until 2009 that things get better. Despite that, most investors have no confidence in Borders stock (even my financial advisors tells me not to purchase Borders stock).
It’s a great company, really. Always was. It’s made some horrendous decisions over the years, but some how its still here. But the writing, it seems, maybe on the wall this time.
However, it seems the company cannot escape its past. This past week, Borders announced that they are seeking “strategic alternatives” in hopes of staving off liquidation. Those options could include sale of the company and/or some of its divisions. The company has hired J.P. Morgan Securities and Merrill Lynch to aide them.
To help prevent liquidity, Borders received some financial commitment from Pershing Square Capital Management (who already have a 10% stake within Borders already) of some $42.5 million (at a whopping, staggering, unbelievable 12.5% interest). Pershing will also have the ability to purchase some of the Borders international business.
This will, essentially, keep the company going through 2008.
And asked why CEO George Jones decided to look for other options after receiving the funding from Pershing, he told analysts on Thursday that the company is looking to maximize shareholder value, and one beneficial aspect might be to sell the company.
As of now, the company is reducing cost across the board, mostly by to reducing inventory (and discontinuing all of the perks on the retail level) while trying to improve inventory turns, which is means, essentially, the stores will be stocked more with stuff that has sold in the past. Essentially, will have a high inventory of, say the Oprah bookclub book New Earth, while lower inventory on new titles from unestablished authors. Since New Earth is selling, and we continue to pump up its inventory, this comes across to potential investors as a “turn” of inventory. It’s smoke and mirrors, but I guess it keeps the company from going belly up.
Still, Borders does not listen to its customers. While most of the ones I encounter like us better (as in employees) than B&N, but they find our stores confusing and not very cozy. They like the staff because they’re knowledgeable and nice, but they don’t want to be bothered every 10 seconds by a staff member coming up to them and asking them if they need help.
The store set-ups are confusing and not user friendly.
And now, with the rapid deterioration of music sales, the company is opening concept stores that offer customers the ability to download music at the store. Of course, I’m unsure why someone would want to do this, considering they can do it at home. Something a customer recently pointed out to me. She thinks the new digital centers is lame and wants to come to Borders to but CD’s.
Spin is the name of the game and the company is already trying to figure out how to get them to come anyways. I’m ambivalent at best on how this will help.
I feel, in the end, Borders will attempt to sell off Walden Books (though I suspect they’ll eventually close these mall based stores) and probably the UK based Paperchase after that. It continues in search of a buyer for its Australian/New Zealand operation, after a recent talks collapsed.
It has, I believe, a year or so left if it cannot turn around sales. Of course, the economy plays a key factor here, also, as its certain it will be not until 2009 that things get better. Despite that, most investors have no confidence in Borders stock (even my financial advisors tells me not to purchase Borders stock).
It’s a great company, really. Always was. It’s made some horrendous decisions over the years, but some how its still here. But the writing, it seems, maybe on the wall this time.
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