Borders Group

Borders is an international book and stationery retailer. Borders was founded in the United States in 1971 by brothers Tom and Louis Borders, the first bookshop opened in Ann Arbor, Michigan.

In October 1992, it was purchased by Kmart, and was then spun-off in 1995 as Borders Group, Inc. remaining headquartered in Ann Arbor, with Waldenbooks as its subsidiary. In 1997, Borders expanded into Singapore, and later Australia and New Zealand. In 1998, Borders expanded into the United Kingdom, and then later Ireland. In 2005, it opened in Malaysia, and in 2006, with Al Maya Group, it opened a location in the United Arab Emirates, and then further expanded across the Middle East.

In September 2007, Risk Capital Partners purchased the Borders stores in the United Kingdom and Ireland, alongside a license to use the Borders name. In June 2008, REDgroup Retail purchased the Borders stores in Singapore, Australia and New Zealand with a license to the Borders name.

In November 2009, Borders in the United Kingdom and Ireland collapsed into administration, with all stores closed by year end, resulting in around 1,150 job losses. In June 2011, Borders closed in Singapore, Australia and New Zealand after its franchisor went into administration. In July 2011, Borders in the United States was liquidated after failing to find a buyer. It employed about 19,500 people throughout America, including Waldenbooks stores. Its final U.S. stores closed in September 2011.

In September 2011, its rival Barnes & Noble acquired the Borders trademark and other intellectual property. The Malaysian and Middle East Borders operations continued to trade under renewed franchise deals with Barnes & Noble. A 2013 attempt to re-establish the brand in Singapore failed. In 2015, Al Maya Group purchased the regional Borders trademark rights outright from Barnes & Noble, and diversified it into a merchandise mix of books, toys and stationery. The Malaysian Borders franchises closed in August 2023.

History

The original Borders bookstore was established in 1971 at 209 South State Street, Ann Arbor, Michigan, United States; founded by brothers Tom and Louis Borders during their study at the University of Michigan.

In 1975, they bought out the stock of Wahr's, an 80-year-old bookstore that was ending business at 316 South State Street, hiring Michael Hildebrand and Harvey James Robin to manage and stock it with rare books. Hildebrand had managed Gibson's used and rare book department in East Lansing and Harvey Robin had restored rare books and moved his bindery upstairs. Wahr's was previously a textbook and school supplies vendor, but the brothers did not deal in textbooks. They moved the retail bookshop to larger quarters down the street at 303 South State, in the former Wagner and Son men's clothing store. The old shop was renamed Charing Cross Bookshop and Tom Frick was sent from the new bookshop to help.

In 1985, the company opened its second location, in Beverly Hills, Michigan.

The downtown Ann Arbor store moved across the street again in 1994 to 612 East Liberty Street, at the southwest corner of Liberty and State Streets, in the building once occupied by the defunct Jacobson's Department Store. Although not the original location, it was identified as "Borders #1" as the flagship store.

Former Hickory Farms president Robert F. DiRomualdo was hired in 1989 to expand the company.

Kmart and Waldenbooks

Borders was acquired in 1992 by Kmart, which had also acquired mall-based book chain Waldenbooks eight years earlier. Kmart had struggled with the book division, having tinkered with assortment and later discounting. In the Borders acquisition, Kmart merged the two companies in hopes that the experienced Borders senior management could bail out floundering Waldenbooks. Instead, many of the Borders senior management team left the company, leaving behind an even larger and more unwieldy division for Kmart executives to handle on the heels of aggressive expansions by rivals Barnes & Noble and Crown Books. Facing fiscal problems and pressure from stockholders, Kmart spun off Borders in 1995, in a structured stock-purchase plan. The new company was initially called Borders-Walden Group but renamed Borders Group by year end.

In 1994, Borders briefly operated All Wound Up, a mall-based toy and novelty store. Most All Wound Up stores were seasonal kiosks in shopping malls.

Borders was rumoured to open stores in Canada, starting with a retail store in Toronto. However, this was rejected for failing to meet Canadian ownership regulations for book retailers.

At one point, the highest-grossing location in the U.S. was a remodelled and expanded store in Puerto Rico, generating $17 million in sales annually. Another notably large and successful location in the U.S. was located at 5 World Trade Center in New York City, but the store sustained damage and was closed following the September 11 attacks.

Changes in business plan

In 1998, Philip Pfeffer succeeded Robert DiRomualdo as chief executive.

In 2003, Borders had 1,249 stores using the Borders and Waldenbooks names.

In 2004, Borders arranged for Starbucks subsidiary Seattle's Best Coffee to operate cafes in its domestic superstores under the Seattle's Best brand name.

In March 2007, Borders Group announced it would halve the Waldenbooks outlets to about 300 over the next year.

In 2008, Borders opened 14 concept stores nationwide, including a Digital Center, offering electronic devices such as MP3 players, digital photo frames, and the Sony Reader. The concept stores were located in Ann Arbor, Michigan; Denver, Colorado; Las Vegas, Nevada; Panama City Beach, Florida; Noblesville, Indiana; Monroeville, Pennsylvania; and Alameda, California. The latest Borders Digital Center opened in Alameda in January 2008.

In late 2007, Borders installed digital video monitors in some stores. The monitors displayed special programs, news, sports, and financial information through Ripple Networks, Inc., a California-based marketing service.

Borders Group also launched Borders Rewards, a free program including coupons and opportunities to earn store credit, unlike the Barnes & Noble paid membership discounts program. Following the lead of Barnes & Noble, the chain discontinued Wi-Fi fees in September 2009.

Declining profits

Borders last annual profit was in 2006, with yearly income dropping by $1 billion over the next four years.

In March 2007, the company ended its marketing alliance with Amazon begun six years earlier, and began plans to launch an online business in early 2008.

In March 2008, Borders Group announced the intention to sell the chain because of financial difficulties. Borders Books was rumored to have approached Barnes & Noble in hopes of a buyout. The chain was in debt, having increased its financial instability by borrowing US$42.5 million in March from Pershing Square Capital Management, the company's major stockholder, to keep the company running through the remainder of the fiscal year. The loan had a very high interest rate of 12.5%, which meant that the chain needed to post a significant profit to stay solvent. Following the announcement of the loan, Borders's shares dropped 28.6% to $5.07/share. The shares continued to drop over the year, on December 11, 2009, Borders stocks traded at $1.30 on the NYSE, which was up almost a point from a low of $0.530 on January 28, 2009.

On January 5, 2009, Ron Marshall took over as chief executive. Former CEO George L. Jones received a severance package of $2.09 million. Mark Bierley was promoted to chief financial officer, replacing Ed Wilhelm. The changes in management were due to Borders's holiday sales having fallen by 11.7% to $868.8 million. On January 13, Mick McGuire, a former partner at Pershing Square, became chairman of the board of directors.

On March 30, 2009, Marshall announced that the loan from Pershing Square would be extended for another year (coming due on April 1, 2010), at an interest rate of 9.8%. This, combined with layoffs and new promotional deals with major publishers, caused Borders stock to rise, topping the $1.00 mark within a week. By mid-April, it had approached $2.00. As a result, the company cancelled plans to ask shareholder permission for a reverse stock split.

On August 11, 2009, Borders revealed the replacements for five of the eight-member board of directors, who had previously announced their intentions to quit. The new members included Paul J. Brown of Hilton Hotels, Timothy V. Wolf of MillerCoors, and Dan Rose of Facebook.

On November 5, 2009, Borders announced that it would close some Waldenbooks stores to improve the profitability of its Specialty Retail operations. By January 2010, 182 stores had closed.

Holiday sales figures for 2009 were "disappointing", with total sales of $846.8 million, (~$ in ) down 14.7% from the previous year. Employees reported major cuts were made in payroll hours.

At the beginning of 2010, the company operated 511 Borders superstores in the United States. The company also operated 175 stores in the Waldenbooks Specialty Retail segment, including Waldenbooks, Borders Express, Borders airport stores, and Borders Outlet stores.

On January 26, 2010, CEO Ron Marshall resigned to become president and CEO of The Great Atlantic & Pacific Tea Co. Following his announcement, Borders stock fell below one dollar per share. During his tenure at Borders, all top executive officers resigned (or were encouraged to leave), including some who had been with the company for over 20 years. Mike Edwards (vice president and chief merchandising officer) was appointed interim CEO.

On March 31, 2010, Borders announced that the Pershing Square loan had been paid in full. In early April, the company's stock rebounded to $2.78 per share.

On May 21, 2010, it was revealed that Bennett S. LeBow, chairman of Vector Group, was making a large private investment in Borders stock. As a result, both LeBow and Howard Lorber, president and CEO of Vector Group, joined the board of directors. Following chairman Mick McGuire's resignation, LeBow was elected chairman of the board. On June 3, LeBow became CEO of Borders Group. Mike Edwards became president of Borders Group and CEO of Borders, Inc., the company's principal subsidiary.

The company reported significant losses for the third quarter, compared to 2009. At the end of 2010, ''Business Week'' and BBC News reported that Borders would be delaying its payments to publishers for inventory already received, to preserve liquidity. This was prompted by problems in refinancing its credit facilities.

Bankruptcy and liquidation

On February 16, 2011, the company announced that it had filed for Chapter 11 bankruptcy protection, listing $1.275 billion in assets and $1.293 billion in debts in its filing. The company also announced the liquidation and closing of 226 stores. Two private-equity firms, The Gores Group and Najafi Companies, expressed interest in purchasing half of the remaining Borders Group stores.

Despite a purchase offer from the private equity firm Najafi Companies, Borders could not find a buyer acceptable to its creditors before its July bidding deadline, so it began liquidating its remaining 399 retail outlets, with the last remaining stores closing in September. Rival bookseller Barnes & Noble acquired Borders's trademarks and customer list.

Borders Group announced on July 1, 2011, that Direct Brands would acquire the assets for $215 million and assume of $220 million in debt.

A group of Borders creditors rejected the Direct Brands takeover bid in July 2011. Borders filed for an auction and the motion was approved; however, the bid deadline expired on July 17 without a bidder. A United States bankruptcy judge approved a petition to liquidate; resulting in the company converting their Chapter 11 case to Chapter 7. On July 22, 2011, Borders started closing its remaining 399 stores with a phased roll-out. Business operations ceased in September 2011. Former rival and the current second-largest chain of bookstores in the United States, Books-A-Million, bid to acquire 30 to 35 stores and their assets on July 19, 2011, the day liquidation was approved by the courts. However, the two sides were unable to come to an agreement.

Books-A-Million again offered to buy portions of Borders Group, purchasing the leases for 21 stores primarily in New England and Pennsylvania.
Borders USA closed its remaining stores on Sunday, September 18, 2011.

The Borders online store closed on September 27, 2011, at 10:30 pm Eastern. A banner then appeared on their website allowing users to browse, but directed to Barnes & Noble to complete their purchases. All Borders customers had until October 29, 2011, to opt out of their personal contact and purchase information being transferred to Barnes & Noble. On October 1, 2011, Borders cardholders were informed by email: "As part of Borders ceasing operations, we Barnes & Noble acquired some of its assets including Borders brand trademarks and their customer list." The federal bankruptcy court approved this sale on September 26, 2011.

International operations

Malaysia (defunct)

In April 2005, Borders Group opened its first franchise store with Malaysia's Berjaya Books Sdn. Bhd. in Kuala Lumpur, located in Berjaya Times Square. The store was advertised as the world's biggest Borders at ; but this changed when one level of the store closed. Borders's second store in Malaysia was located in The Curve, Mutiara Damansara, and the third opened in Queensbay Mall, Penang on December 7, 2006, and closed on 26th December 2019. It has sinced been rumoured that another store will open in Sunway Pyramid shopping mall in the near future.

Middle East (present)

Borders opened a franchise store in the Mall of the Emirates in Dubai, UAE in October 2006. Despite financial difficulties in the domestic market, Borders continued to expand its franchises, adding stores in Oman and Sharjah.

By the end of 2009, all of Borders's directly owned overseas locations were sold or closed, leaving only franchise stores in Dubai and Oman.

International Borders stores still operate in Middle Eastern countries including the United Arab Emirates, Oman, Qatar and Kuwait. These stores are now under different ownership from the original Borders Group, and were unaffected by their store closures. In Dubai, Al Maya Group purchased lifetime rights to the Borders brand in the Middle East in 2015, and diversified to books, toys and stationery.

Singapore, Australia and New Zealand (defunct)

In 1997, the company established its first international store in Singapore, occupying in Wheelock Place, Orchard Road.

In the third quarter of 2006, the Singapore store emerged as the best performing among the group's 559 outlets, with the highest revenue generated per square meter.''"S'pore store is Borders' No. 1"'', The Straits Times (Life!), November 15, 2006, p. 10

To pay off debt, Borders sold its Australian, New Zealand and Singaporean stores to Pacific Equity Partners (owner of competitor Angus & Robertson) in 2008, forming REDgroup Retail to pay off debt. After this transaction, the Borders stores in the US, UK (which was sold to another company but entered administration in 2009), and Asia/Pacific region were owned by independent entities.

In late July 2012, Pearson Australia Group re-branded the Borders website as Bookworld.
Chief Executive James Webber told The Australian "The Borders brand had lost its former sheen. We just believe the Borders brand has had its day. There are no stores left and globally it's been in demise so we believe there's an opportunity to revitalise (the franchise) and move it forward."

All of its existing customer base was migrated over to the new Bookworld website. The Bookworld brand was itself also later rebranded as Angus & Robertson.

The stores continued to operate under the Borders brand as the unaffiliated "Borders Asia Pacific" until REDGroup was placed into voluntary administration in February 2011, with Ferrier Hodgson appointed as administrators. The day after the announcement, customers of the surviving stores were informed that gift vouchers could only be redeemed if they also spent an equivalent amount in cash. After 3 April, unused vouchers became void. The five New Zealand stores were sold to the James Pascoe Group and the Australian stores gradually shut down, the last group closing in July 2011.

The handling of the administration prompted 25 franchised Angus & Robertson stores to sever ties with REDGroup, rebranding themselves as independents. By the end of May, 70 of the 87 REDGroup-owned bookstores in New Zealand had been sold off: ten airport-based Whitcoulls stores to Australian-based LS Travel Retail Pacific, and another 57 Whitcoulls plus five Borders stores to the James Pascoe Group.

The flagship Borders store at Wheelock Place in Singapore suddenly closed on 16 August 2011, and was forced to clear out by 23 August 2011. Vouchers and gift cards from Borders Singapore bookstore were no longer accepted. After hearing that the Borders store at Wheelock Place was shutting down, some people tried to use their vouchers on the Saturday at its other outlet at Parkway Parade, but they were not allowed to do so. The books were cleared at a sale held at Singapore Expo Hall 4B, from 10am to 10pm, from 2 September 2011 to 6 September 2011. The remaining store closed on 26 September 2011 at 9 p.m., ending 14 years of sales in Singapore, just before the lease was due to end in October, but not before discounts of 70% to clear all items which started three days before its closure. In the last hours of business in Singapore, shelves, signs, baskets and computers at the cashiers' counters were also available for sale.

Stores

In total, Borders had 33 stores located across Australia, New Zealand and Singapore. All were closed due to the demise of the parent company REDgroup Retail.

The last remaining Singaporean Borders store in Parkway Parade Shopping Center, closed its doors at 9 pm (Singapore time) after a final sale on Monday, September 26, 2011.

The Borders brand in Singapore was purchased by Popular Holdings in late 2012. In an attempt to revive the brand, a single Borders store opened in Westgate for a trial period in 2013, but that store was shortly after converted to a regular Popular book store.

United Kingdom and Ireland (defunct)

In the United Kingdom, Borders bought 35 Books etc. stores from Philip and Richard Joseph.

In 1998, Borders (UK) Ltd. was established as a Borders Group subsidiary and with its Borders and Books etc. After quickly becoming one of the country's leading booksellers, due to the fierce competition in the UK marketplace, a number of the Books etc. stores closed, and Borders (UK) Ltd. was sold in 2007 to a private-equity investor. The chain won numerous awards including Bookselling Chain of the Year 2005 & 2006, Chain Bookselling Company of the Year 2006 & 2007, Hachette Children's Retailer of the Year 2007, Magazine Destination Retailer of the Year 2007 and Usborne Children's Bookseller of the Year 2008

In March 2007, Borders Group announced the disposal of its Ireland and UK businesses, including its Books etc. business in the UK, with the aim of revitalizing the core US business; however, it was also announced that Borders Group would retain the Paperchase stationery business. International expansion would continue via franchising.

A typical Borders shop in the UK contained both a Paperchase stationery and Starbucks cafe concession. In addition, some branches also contained RED5 gadget and GAME video game concessions.


In September 2007, Borders (UK) Ltd. was acquired by Luke Johnson's London-based private equity investor Risk Capital Partners in a £20 million deal. Bookshop Acquisitions Ltd. - a subsidiary of Risk Capital Partners - was established for the purchase, and the deal included rights to the Borders and Books etc. brand names. Under the deal, Borders would receive an equity interest of about 17% in Bookshop Acquisitions. However, after changing hands in 2009, Borders in Ireland and the UK went into administration on November 26, 2009.

David Roche resigned as CEO of Borders (UK) in January 2008, and was replaced by former managing director, Philip Downer. Upon appointment, Downer called for a category review of the entire company, though made clear there were no immediate plans to further restructure the business.

In March 2008 that Borders (UK) announced plans to close its distribution centre (based in Cornwall) on 29 August, in favour of having publishers and wholesalers deliver directly to shops. This was opposite to the decision of competitor Waterstones, which planned to test and open its own distribution centre, colloquially referred to as 'The Hub', from the end of May.

In July 2008, Borders launched an e-commerce website. In a bid to try to take back a share of internet sales of books, the beta testing of its transactional website commenced, due for completion before the end of the month.

Borders sold eight London Books Etc. shops to Waterstones in August 2008, for an undisclosed sum.

Five Borders shops in Oxford Street, Llantrisant, Blanchardstown, Swindon and London Colney were closed in July 2009, replaced by New Look. After July 2009, Borders was owned by Valco Capital Partners, part of Hilco, which specialises in distressed retailers.

At the end of September 2009, it was announced that most remaining Books Etc., and the two Borders Express shops, would be sold, and closing down sales began shortly after.

Administration

In November 2009 the company began searching for a buyer following liquidity concerns. The following day the Borders website stopped taking orders for books, while orders for CDs and DVDs through the Borders Entertainment website continued, as it was run by The Hut Group.

On 26 November 2009, Reuters announced that Borders (UK) entered administration, after difficulties raising enough cash to trade through the key Christmas period. This article was soon withdrawn, and replaced with a corrected item reporting the company was 'mulling' administration. This news came after difficult weeks for the company, reported to be on credit stop with all the major publishers, and (following breakdown of negotiations with WHSmith) still searching for a buyer.

Later that day, Borders (UK) Ltd officially went into administration. Initially the intention was to appoint BDO as administrators, but a conflict of interest was discovered. Instead, MCR was appointed by Borders' owners—Valco Capital Partners, part of Hilco—as administrators. The BBC added that MCR 'hired specialist liquidators Hilco to advise'. A 'parallel strategy' was applied of seeking a buyer for the chain as a going interest, while running closing-down sales.

On the evening of 27 November 2009, it was announced that a closing-down sale would commence in all stores the following day. During the sales, sale stock included Denby China, a separate concern bought out by Valco Capital Partners earlier in 2009. The publisher Hachette successfully took MCR to court for continuing to sell Hachette titles without first obtaining permission, obtaining a High Court judgement on 18 December 2009 that MCR was 'incorrect' to do so.

MCR, the administrator for the chain, stated the intention of seeking a buyer. MCR rejected a 'serious attempt' by Richard Joseph, co-founder of the Books Etc. chain, to buy a number of stores. A spokesman for MCR confirmed that unsuccessful bids had been made which had failed to meet expectations. MCR announced that the 45 stores would cease trading and close their doors permanently on 22 December, claiming that it had not been possible to sell the chain as a going concern. All staff members were made redundant on 24 December 2009.

The BOOKS etc. name and its website and the Borders database were bought by Capital Books Ltd in January 2010. As of May 2022, Books Etc. still operates as an independent family-run online business. The logo contained both the Books etc. logo and the Borders logo to reflect the fact that Borders (UK) operated two different brands. The company Borders (UK) Limited was dissolved in August 2011.

eBook store

On July 7, 2010, Borders opened an eBook store to allow books to be directly downloaded to an e-reader device or a Borders eReader app for the desktop, iPhone, iPad, BlackBerry, or Android. Although branded as a Borders store, it was actually handled by Kobo, Inc.

On June 3, 2011, the Borders eReader apps were changed to Kobo eReader apps and users could transfer their Borders eBooks to their Kobo library.

See also

* Books in the United States
* Retail apocalypse
* List of retailers affected by the retail apocalypse

References

External links

Official Website
(Archive)

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