Giant bookseller Borders Group Inc., battered by poor sales, continuing financial losses and heavy debt, filed for bankruptcy protection Wednesday and said it would close about 200 of its 642 stores and lay off about 6,000 of its 19,000 workers.
In California, 35 stores will be shuttered, including 21 in Southern California. Among those being closed are stores in Century City, Glendale, Valencia, Tustin, Orange, Oxnard, Long Beach and Pasadena. All the stores that will be closed are underperforming superstores, Borders said.
A complete list of Borders store closures nationwide can be found at https://www.bordersreorganization.com/Reorganization_Closure_List.pdf.
In a filing in U.S. Bankruptcy Court in New York, the company listed $1.29 billion in debt and $1.27 billion in assets. The company owes millions to book publishers, the largest amounts being $41.1 million to Penguin Group , $36.9 million to Hachette Book Group and $33.8 million to Simon & Schuster.
Citing reduced customer spending, negotiations with vendors and a lack of liquidity, Borders President Mike Edwards said in a statement that the company “does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term.”
The company noted that it has secured $505 million in debtor-in-possession financing from GE Capital and others to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
“We have the ability … to be an important and easy access destination of exploration and purchase for readers across the country,” Edwards said.
Industry experts said the chain faces major challenges.
As the company looks to eventually emerge from bankruptcy, it must make a quick and intelligent strategy shift, said Al Greco, a book publishing expert and professor of marketing at Fordham University’s Graduate School of Business.
“Unless they can come up with a first-rate marketing strategy to sell physical and e-books and get more traffic to its website, this company could be in worse trouble six months from now,” he said.
Another concern is whether the book publishers and distributors who are owed money will continue to ship books to the company, pairing a lack of crucial inventory with a loss of revenue from store closings, Greco said.
The company’s prospects of survival appear to be slim, Greco said. Even if Borders is able to create a viable business strategy, it still must compete with Barnes & Noble, a thriving Amazon.com and other discounters. “All of these problems will not disappear,” Greco said. “It will be very difficult.”
Credit Suisse analyst Gary Balter said in a note to investors Wednesday that the Borders store closings might put more than $550 million in sales up for grabs and suggested that rival Barnes & Noble was well-positioned to nab much of it.
Borders shares fell 4.8 cents, or 21%, to 18 cents, an all-time low. Barnes & Noble rose 8 cents to $18.77.