What's going on with Borders?
Borders was once a rival to Barnes & Noble. The two brick-and-mortar chain bookstores were able to offer lower prices than independent bookstores and drove many out of business. But that was before the success of Amazon and other online retailers brought the phrase "brick and mortar" into regular use -- and once that happened, everything changed.
Barnes & Noble, if buffeted by Amazon's success, has remained afloat; Borders has been taking on water.
On Dec. 30 Borders announced it would not make payments owed to some publishers, without specifying whom. Hachette confirmed that it was among those who would not be paid by Borders.
Borders has nearly 200 Waldenbooks and Borders Express outlets slated for closure before the month of January is out. Additional Borders stores are also set to close, including Westwood's.
Borders is also cutting back on staff. On Wednesday, Borders announced that it would close a distribution center in Tennessee, eliminating more than 300 jobs; 15 management positions were eliminated Friday. And the resignation of two top executives -- the chief information officer and general counsel -- was announced at the beginning of 2011.
Meanwhile, Borders is seeking to restructure its debt. On Thursday, Borders met with publishers and proposed that the payments owed by the bookseller be reclassified as a loan, as part of that refinancing. "But on Friday, publishers remained skeptical of the proposal put forth by Borders," the New York Times reports. "One publisher said that the proposal was not enough to convince the group that Borders had found a way to revive its business, and that they were less optimistic than ever that publishers could return to doing business with Borders."
Nevertheless, Borders -- which lost money in the first three quarters of 2010 -- remains the second-largest bookstore chain by revenue. Its loss would have a significant effect on publishers.
Investors, however, seem cheered by the recent news swirling around Borders. Shares rose 12% on Thursday after reports that the bookseller was close to securing financing.
-- Carolyn Kellogg
Photo: Borders sign in Washington, D.C. Credit: Andrew Harrer / Bloomberg