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 Bookstore chain Borders Group Inc. culminated a rough 2008 with an announcement Monday that it hired a new CEO following a sales drop of 14.4% during the holiday season compared to the same period in 2007. The numbers likely prompted the executive change, but the move may be too little too late. With the economy reeling and discretionary income low, many speculate the next move for Borders maybe a Chapter 11 filing.
Ron Marshall takes the helm as CEO and president, but it looks like he is steering a sinking ship in troubled economic waters. Plus, he's facing a raiding party from activist hedge fund Pershing Square Capital Management LP's William Ackman as well as cut-throat competition from Barnes and Nobles Inc. and Amazon.com Inc. To top it off, Borders' weakening financial profile is reflected in the bookseller's stock price, which is trading in the 45 cent range, making it cheaper than the average daily newspaper the chain stocks its shelves with. Borders' holiday blues were no surprise as most retailers expect to report a drop in 2008. But the drop in holiday sales may yet be another sign that the struggling bookstore chain may join the likes of other retailers that have fallen into bankruptcy recently, such as Circuit City Stores Inc. The chain store stated consolidated sales were $868.8 million, an 11.7% fall, during the nine weeks ended Jan. 3 from the year before. This obviously doesn't bode well for Borders, whose options seem limited. A potential acquirer seems unrealistic with the credit markets still tight. Just ask competitor Barnes & Noble, which dropped out of the picture of a possible deal for Borders in August as financing became harder to come by in the initial stages of the credit crisis. Borders tried to put a positive spin on the dour holiday sales numbers, saying in a statement: "Overall, holiday sales started slow and improved during the latter part of the season." But those words may not be enough to comfort investors. The only salvation may be a Chapter 11 filing, but those two words are something shareholders likely won't want to hear. - Gerald Magpily See MarketWatch: Borders names Ron Marshall as chief executive, president See Dealscape: Barnes & Noble crosses Borders off its wish list See Dealscape: Borders reads Ackman a warrant CategoriesComments
From: w buffett,
where is bill ackman talking about what a good thing bankruptcy will be for this p.o.s.?
Posted on:
January 5, 2009 11:37 PM
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I think the author of this article is a little behind. Borders stock has been rising steadily for the past few days and is now at about 60.