Ann Arbor-based Borders 'disappointed' with 13.7 percent decline in 2009 holiday sales
Borders Group Inc.’s  2009 holiday sales plunged 13.7 percent compared to the same period in 2008, a sign that the Ann Arbor-based book store chain's (NYSE:BGP) turnaround strategy is failing to gain traction.
The embattled firm reported today that its total sales for the 11-week holiday period, which ended Jan. 16, fell to $846.8 million. Same-store sales at Borders super stores slipped 14.6 percent during the holiday season, a critical period for all retailers.
Borders Group Inc. employs more than 800 workers at its Ann Arbor headquarters.
The sales report is sure to highlight concerns that Borders’ future rests on a rickety foundation. Total holiday sales for competitor Barnes & Noble, by contrast, fell 5 percent.
“We are disappointed with holiday results and must intensify our focus on creating and delivering a shopping experience that drives profitable sales,” Borders CEO Ron Marshall said in a statement.
Total sales for Borders’ super store segment fell 14.7 percent.
Analysts considered the holiday sales season a crucial moment for Borders, which barely avoided bankruptcy during the global financial crisis in late 2008.
“It’s just put up or shut up time for them,” said Michael Norris, a
bookstore analyst for Rockville, Md.-based Simba Information, in November.
Borders attributed a portion of the decline to its decision to reduce floor space for DVDs and music. Aside from music and movies, Borders super stores reported a sales decline of 10.9 percent.
“Given the sales challenge, we have continued to manage cash flow and have taken several important steps in line with our strategic priorities, including moving away from underperforming, low-margin categories such as music and video in favor of better performing categories such as children’s,” Marshall said.
During an earnings call with investors and analysts in November, Marshall said he was confident that Borders was well prepared for the holiday season.
"Borders is better positioned now than we have been in recent years for this holiday selling season," he said. "This is an unpredictable holiday selling season as consumers remain unsettled and reactive to economic news, but we have taken the necessary steps and made the right investments to prepare our stores for this fourth quarter."
U.S. retailers reported a 1.1 percent increase in total holiday sales, according to the National Retail Federation.
Borders' sales results underscore the the long-term challenges for the book store chain, which faces intense competition from Walmart, Amazon.com, Target, Barnes & Noble and other smaller players.
U.S. stock markets are closed today for Martin Luther King Jr. Day. Borders shares (NYSE:BGP) closed Friday at $1.36.
Borders employs more than 800 workers at its headquarters on Phoenix Drive in Ann Arbor.
The sales report comes after Borders said in November that its third-quarter sales fell 12.7 percent to $595.5 million. Same-store sales in the third-quarter declined 12.2 percent.
Contact AnnArbor.com’s Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter.
Comments
Bob
Thu, Feb 4, 2010 : 2:15 p.m.
@UofM_Fan....as a former corporate office employee myself...you are right on the money...I don't know how many "re-orgs" I sat through....they never accomplished anything....it's sad they are almost finished...but this will drag on for a couple more years...
KJMClark
Thu, Jan 21, 2010 : 10:37 a.m.
Tom Joad is almost right. It is because of Amazon, but mostly because Amazon is cheating on sales taxes. It's just like China's breaking international trade laws by manipulating its currency is killing manufacturing in the US. Break the law and get away with it, and the folks who suffer the most are your competitors. Borders has made many missteps, but they would have done better all along the way if Amazon hadn't been breaking the law the whole time.
clownfish
Tue, Jan 19, 2010 : 1:39 p.m.
A comment was removed because it violated the A2.com policy of not making disparaging remarks about A2.com. Censorship has a place, removing a comment because it pointed out the connection of bad leadership at two companies, A2.com being one, is not sound journalism, it is a sad comment on A2.coms desire to dish it out, but not take it. Check out your sales of print edition, then figure out who is to blame, the carriers or the leadership.
beermaestro
Tue, Jan 19, 2010 : 1:04 p.m.
On a recent visit to Arborland Border's, here's what I saw: Board games, skin care products, all manner of Twilight trinkets and toys, and enough different calendars to equip the US Pentagon. Here is what I did not see: two hard-to-find Tolkien references that I picked up the same day at Barnes and Noble because Borders Tolkien section was *still* completely depleted from the holidays. Less junk! More books!
PhillyCheeseSteak
Tue, Jan 19, 2010 : 12:39 p.m.
I always try to shop at Borders, in-store an on-line, because I prefer to shop local when I can. I hope that Borders can get their act together and make it work.
Adam Jaskiewicz
Tue, Jan 19, 2010 : 11:52 a.m.
I used to love Borders, but lately it seems just like any other big, commercial book store. Impersonal, cookie-cutter, etc. They're trying to compete with Amazon, which they just can't do---they can't match the prices, distribution network, or selection. A brick-and-mortar bookstore needs to compete by having knowledgeable, insightful, and friendly staff that can judge a customer's tastes and give them sound recommendations. In the past I've done a lot of holiday shopping at Borders. This year, I went to Nicola's Books and was much happier.
B82Colwell
Tue, Jan 19, 2010 : 11:04 a.m.
As an avid reader I used to love going to the downtown boards and browsing my favorite sections. Now the downtown traffic, emptying of the store, and ease of ordering online has made it so I don't go downtown anymore. A good friend of mine works at the Boarders by Best Buy and she said that hours are being cut left and right and manager staff have been eliminated with no plans for replacement. Not good for the future of Boarders
MyOpinion
Mon, Jan 18, 2010 : 5:35 p.m.
I try to support Borders, but when they do not have the item on hand, I buy from the competition. Borders does not have a very good distribution system. Too bad they didn't copy the other iconic Ann Arbor business - Zingerman's. They have a pretty strong mail order system. Borders was pathetically late with on-line ordering and they still don't make it very attractive. Often it costs as much or more to order on-line as it does to buy in a store.
Tom Joad
Mon, Jan 18, 2010 : 4:38 p.m.
Just as craigslist killed the newspapers, including the Ann Arbor News, Amazon.com is placing the final nails in Borders' coffin. Any book I've bought in the last few years, and they haven't been many since I've instituted a book buying moratorium to stave off hoarding, has been from Amazon. The A2 Borders is cavernous waste of space. People do vote with their pocketbook, especiall in the Bush/Obama Depression.
MyOpinion
Mon, Jan 18, 2010 : 4:09 p.m.
The company right now doesn't know what sort of business it is in. I just went to the Liberty Borders on Friday night. It was pretty empty - perhaps 30 customers. Vast swaths of the store are vacant, particularly upstairs. Are they in the midst of a new floor layout? Otherwise, at least fill the space up with sofa chairs and lamps to encourage browsers. I did get plenty of attention from the store personnel - nice, but also an indication that there are few enough customers that they can give each customer individual attention.
Woman in Ypsilanti
Mon, Jan 18, 2010 : 4 p.m.
UofM_Fan is right on the money. Borders used to be run by people who liked books and liked the book business. The original Borders store was one of the best book stores I have ever seen. Over the years, Borders just became more and more like the corporate Barnes and Noble. The world simply doesn't need another Barnes and Noble. The world needs Borders. Oh well. I just hope that when Borders finally crashes and burns, Ann Arbor will still have a decent downtown bookstore but that is probably a pipe dream.
ChildeJake
Mon, Jan 18, 2010 : 3:51 p.m.
I am a regular customer at two Borders locations. My shopping experience continues to be incredibly positive when I go to the store. And I am certainly willing to pay a bit more than Amazon prices to support having a clean, well-stocked bookstore within driving distance. People need to understand that when they buy Bestsellers at Amazon/Wal-Mart prices they are contributing to a business model that is unsustainable for the book publishing industrythat is, if you care about quality.
UofM_Fan
Mon, Jan 18, 2010 : 3:44 p.m.
Oh, if it were only that simple. Borders decline goes back years, even before they had a web site. As a former employee, I can tell you that the problems they are having stem from the greed of the executives over the years. It's the same old story, too often decisions were made with nothing more than the short-term goal of making money on stock options. Executives would cash in, bail out and move to Florida ("Bobby D"). Turnover in management then spawned yearly re-orgs that were nothing more than change for the sake of change. No real work could get done and things continued to slide downhill. So, how would they address it? More re-orgs. Borders' failure has been a long time coming.
jrigglem
Mon, Jan 18, 2010 : 2:58 p.m.
It's because they changed online ordering, you can no longer pay for the item when you pick it up in the store, you have to pay before it's shipped...