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Tuesday's fourth-quarter earnings announcement was again not impressive with consolidated sales down 12.9% to $1.1 billion from a year ago. With more than 1,000 locations around the world, Borders has played second fiddle to big-box book seller Barnes & Nobles Inc. (NYSE:BKS) for so long it seems nearly impossible it'll overtake its arch nemesis, especially in this economy. So why continue to fight a losing battle? Consumers are spending less in bookstores partly because of their falling discretionary incomes, and then there are those mounting job losses. It has become so bad that public libraries around the U.S. are seeing a resurgence of attendance and borrowing. According to MSNBC, public library use has increased 28% in Illinois, 26 % in Utah and 33% in Michigan since the start of the recession. Only recently has Borders committed to an e-commerce presence, launching its own Web site last May after abandoning it in 2001 following the dot-com bust. So far, the return to its own e-commerce site hasn't made up for sales that have sunk in its super-sized stores. Total sales at Borders superstores in the fourth quarter were $816.1 million, down 14.8% from the same year-ago period. For the full year, total sales were $2.6 billion, down 9.4% from 2007. Meanwhile, the obvious benefit of closing stores is that Borders wouldn't have to worry about paying rent and employees for their former locations. Borders could solely focus on the consumers changing appetite for the way they purchase books. These days consumers are not buying their books from retail chains like they use to, and with the advent of book readers such as Amazon.com Inc.'s (NASDAQ:AMZN) Kindle in the marketplace, it looks like sales at book stores will continue to decline. The Kindle has the potential to do to the printed book and bookstore what the iPod helped do to buying CDs in record stores like Tower Records. Just ask Pacific Crest analyst Steve Weinstein; he sees global e-book sales at Amazon potentially reaching $2.5 billion by the year 2012, paidConent reported. So, will Borders become another Tower? Their situations seem very familiar. They both were in dire straights, having trouble to adapt to a changing market. The music retailer slipped so bad it filed for Chapter 11 for the second and final time in 2006. For Borders, its only bold pronouncement is a failed attempt to sell itself last year. Perhaps only a drastic makeover of going solely cyber is its only salvation. - Gerald Magpily See Borders earnings press release
CategoriesComments
From: Gerald Magpily
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Hi Diandre, I agree with your comment wholeheartedly. However, Borders needs to make that change now before it's too late. That's what happened to Tower Records, they didn't react to the marketplace fast enough and was forced to file for bankruptcy twice before being forced to sell their Tower.com brand to another entity ... Thanks. Gerald
Posted on:
April 2, 2009 10:31 AM
From: Persephone,
Borders lost the online battle when they decided to partner with Amazon. When Borders finally decided to relaunch Borders.com, they built the site but nobody came. I will never understand why Borders ever thought that partnership could benefit them.
Posted on:
May 21, 2009 12:52 AM
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Borders Group Inc. (NYSE:BGP) should get out of selling books in a big-box retail format and just offer products online while it still has a few dollars left in its pockets. 
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If Borders put more of a consistent effort into their online presence, then they would have more of a chance for survival. Even though the Tower stores crumbled, the brand managed to survive with its online business and now is a pretty good place to still buy music: http://www.tower.com/