Borders booksellers, in the wake of their recent bankruptcy filing, will be closing 11 stores in the Bay Area and 200 stores nationwide, as reported by the San Francisco Chronicle.
The closing of the San Francisco stores, 11 out of a total of 19 in the Bay Area, will result in lay offs of up to 500 employees beginning February 19. Retail space, accounting for hundred of square feet, will be left vacant in Union Square in San Francisco and Santana Row in San Jose.
On a national scale Borders will close 200 of its 642 stores, with the possibility of 75 more, and a grand total of 6,000 employees will loose their jobs.
The filing was made on February 16.
Justin Morgan, 15-year veteran supervisor at the store in Union Square commented, "It's not like a shock. We've had plenty of warning scares." In fact, stores have been closing down for five years, jobs have been cut, debts were restructured and many CEOs couldn't keep Borders afloat.
Debts had grown to $1.29 billion while assets were listed as $1.28 billion on December 25, 2010. Penguin Putnam, Simon & Schuster, Random House, as well as other publishing houses and vendors, are owed a collective $302 million.
The president of the American Booksellers Association, ABA, Michael Tucker, said that it was like a, "slow-motion train wreck." Tucker continued, "Publishers are going to take a tremendous hit, but at least they are prepared. If this had happened a couple of years ago, it would have been truly devastating."
Speculation is that all booksellers have taken a distinct plunge in their business due to technology that includes e-books, Kindles, iPads and the far-reaching power of Amazon.com.
Nielsen, in tracking 70% of the market - all but Walmart - recorded a drop of over $30 million from 2009 to 2010. But even in the current market, Barnes & Noble booksellers were able to increase sales before the last holiday season with the help of their Nook e-reader.
Borders, on the other hand, reported a fall in sales of 17.9 percent for their fiscal year that ended January 29. The net loss came in at $168.2 million for the period between January and November 2010.
According to the Chapter 11 filing, Borders was loosing $2 million a week in the stores that were scheduled to close.
Other factors, decisions solely made by Borders that led to the bankruptcy, have been the borrowing of millions to expand overseas and buy back shares, changing CEO's four times in five years - none with any book business experience - and an err in judgment when they finally made their foray into the Internet.
Borders had partnered with Amazon. Speculation grew that Amazon wasn't motivated to develop a rival bookseller on their site.
The executive director of the Northern California Independent Booksellers Association, Hut Landon, said, "That didn't make a lot of sense. They didn't adapt to technology.
They never got ahead of the game online."
In 2006, after figuring out that partnering with Amazon was a mistake, Borders took control of their own online business. But it was far too late.
Borders has stated that it will be able to continue with the newly acquired $505 million in "debtor-in-possession financing" made available by private equity firms.
Mike Edwards, The Borders Group president, made this statement, "We are confident that with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors and the reading public, a successful reorganization can be achieved enabling Borders to emerge from the process as a stronger and more vibrant bookseller."
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