Saturday, May 23, 2009

Re-structuring firm reviews Borders porfolio

As Waterstones plan to launch a new and improved website, speculation is rife regarding the future of rival Borders, who according to a report in yesterday's Independent, have been working with RSM Bentley Jennison to review a range of potential restructuring options.

One suggestion is the closure of the company's less profitable stores, mostly those on out of town retail parks, of which last time I looked, there were many. I have always felt that this was one of the company's weak points, since most shoppers visit these out of town sites to buy much larger items such as furniture and electrical goods; smaller items such as books lend themselves better to the High Street as they tend to be impulse buys.

Majority stakeholder Luke Johnson, former boss of Channel 4 who bought the business in 2007 refused to comment, as did Tony Stockdale, National Managing partner of RSM Bentley Jennison.

From what I understand, admittedly reading between the lines, the company has been in trouble for some time, and to be honest, I am surprised that they are even still trading. The more profitable stores have evidently been carrying the less profitable ones for some time, and as with my former employer, this can no longer continue, as it is not good business sense.

There have been several closures in recent months, including stores in Lakeside and Croydon, and most of the company's airport stores. The inventory currently consists of some 28 Borders, 2 Borders Express and 7 Books Etc. Speculation has been rife for several months following concerns over credit insurers and the company's exposure to Icelandic banks. All rumours have been consistently denied.

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