Borders (retailer)
Borders is an American book and stationery retailer founded in 1971 in Ann Arbor, Michigan, by brothers Tom and Louis Borders.
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 licence 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.Image:2008-11-10 Borders in Chapel Hill.jpg|thumb|right|A Borders store in Chapel Hill, North Carolina
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.
Image:Borders headquarters building ann arbor michigan.JPG|thumb|right|Borders headquarters building, Ann Arbor, Michigan
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, 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, 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, including some who had been with the company for over 20 years. Mike Edwards 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 $2.45 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.