As a booklover, I am also a bookstore lover. And of course I spent some years in that industry. I love all types of bookstores – mainstream ones, eccentric ones, new ones, used ones, general stores, specialist stores, chains, and independents. While I do my share of online shopping, nothing takes the place of a real bricks and mortar bookstore if you are really going to browse, if you are in a curious frame of mind and just want to drift around among the thousands of titles.
Given all that, I would hate to see Borders go away. Tom and Louis Borders built an admirable operation. In some departments, even better than my friends at Barnes & Noble (who bought out my company BOOKSTOP twenty years ago). But since the Borders sold out, almost twenty years ago, the company has had a parade of management teams, and the present one seems among the worst.
Take this excerpt from this week’s business news:
Borders tries to write happy ending
ANN ARBOR , Mich. (Aug. 25) Book retailing remains a tumultuous marketplace with quarterly results from Borders today suggesting the road ahead will remain challenging.
For starters, Borders reported net and operating losses that were worse than the prior year as sales declined 17.7% to $617 million during its second quarter ended August 1. The company ended the period with 513 Borders stores and 370 Waldenbooks locations. Same-store sales declined 17.9%at Borders superstores, on top of a 9% drop the prior year, and 10.8% at Waldenbooks specialty stores. Comps at Borders only declined 13%if the multimedia category is excluded.
“The second quarter was a transitional one as we made significant space and inventory reductions to strategically position declining categories for profitability while further developing businesses that have potential,” said Borders Group CEO Ron Marshall. “While this transition impacted sales in the short run, our stores are now better positioned to drive improved sales in the back half of the year.
Further, we are pleased that even with the level of transformation we undertook in the second quarter, our financial disciplines remained intact and we continued to strengthen our balance sheet by cutting debt, generating positive cash flow, reducing inventory and tightly managing working capital. The big changes for the year are behind us now and the challenge is to deliver on the opportunity we have created to drive sales.”
The weakness in Borders numbers was seen as a modest positive for Barnes & Noble, according to Stifel Nicolaus analyst David Schick, because Barnes & Noble now faces a more benign profit environment in the short to medium term as a result of Border’s difficulties.
“This dynamic does nothing to alleviate the larger concerns we believe are fair and continue to monitor that (Barnes & Noble) faces substantial pressure from competitive forces and secular trends,” according to Schick, who notes that Walmart, Target, Costco, Amazon and E-readers all present competitive challenges at a time when consumers of all age cohorts reading less due to Internet usage.
A few weeks ago I wrote about the huge risk that superstore (or category killer) companies like Borders are taking when they reduce their inventory levels. (See http://hooversworld.com/archives/3005.)
And yet here we see the CEO of a company effectively saying, “Our sales are down 27% over the last two years and we have reduced inventory levels, so we are all set for good things to happen to sales now.”
Where do these people learn how to retail? At what school did they learn math?
It would be a shame for book lovers if we lost Borders. But their odds do not look good from my vantage point. Every time I go into Borders, it seems like they have fewer and fewer books.
I guess if they gradually get rid of all the books, it wouldn’t be such a great loss after all. But in its glory days Borders was a retail chain anyone would be proud of – employees or shoppers.