January 4, 2011
Borders backtracks and sidetracks, but still seems headed off-tracks
by Dennis Johnson
Borders Group Inc. seems to be in free fall.
According to a New York Times report by Julie Bosman, yesterday the company compounded anxiety about its future by announcing that it “was not in a liquidity crisis and that its stores were well-stocked” — this despite a press release four days ago in which it announced that it was experiencing a “liquidity shortfall” (see yesterday’s MobyLives report) in terms of paying its debts, and despite numerous reports that stores were looking low on inventory … which seems likely as several major accounts have stopped shipping books to the chain since its announcement.
Meanwhile, while the company gives out contradictory statements, Bosman reports that Borders will be holding “hastily arranged meetings in New York later this week” with major publishers at which company CEO Mike Edwards will be present. A spokesman explained “We value our relationships with them, which is why we’re engaging in discussions with them.”
Whatever. The wheels seem to be flying off the vehicle. As Bosman’s report continues: The company “will enter the talks without two top Borders executives whose resignations were announced on Monday: Thomas D. Carney, the company’s general counsel; and Scott Laverty, the chief information officer.”
As Jeffrey Trachtenberg reports in a Wall Street Journal story, the resignations — which the company revealed not in its public statements regarding its situation but only through a required filing with the Securities and Exchange Commission, made public yesterday — are “a new sign of turmoil amid the retailer’s dire finances.”
Asked for comment, a Borders statement to the paper said only, “We have evaluated our leadership structure and, as a result, some positions have been eliminated.”
All of which was thrown into stark relief yesterday by the news that Barnes & Noble had experienced phenomenal sales during the lead-up to Christmas, including, on December 23, the “largest retail sales day ever in the company’s nearly 40-year history,” according to a company press release.
Nonetheless, some important things to note about the Borders collapse: While more publishers than have been reported have stopped shipping books to BGI, one of its very biggest suppliers, the wholesaler Ingram, announced it would continue supplying the chain, according to Trachtenberg.
Then there’s the fact that Borders obviously must have some confidence that the tactic of withholding payments from accounts will force a re-negotiation of its debt payments. After all, the company hasn’t declared bankruptcy yet.
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives