Borders Group employs 19,000 people, with over 650 stores worldwide, including Waldenbooks.
National bookstore chain Borders is entering 2011 with some serious financial troubles, following word that it was holding off payments to vendors. In addition, Borders announced on Monday, two executives were leaving the troubled brick-and-mortar book store.
Second behind Barnes & Noble in terms of sales, Borders, based in Michigan, said it is talking with vendors about restructuring payments plans as it looks for ways to cover a possible shortfall of cash.
Borders spokeswoman Mary Davis said the company is talking with its lenders to refinance debts and secure enough cash to pay off vendors and purchase new inventory for stores.
News of the company’s tight cash situation caused the company’s stock price to fall under a dollar for the first time since February 2010. Shares (NYSE: BGP) closed Friday at 90 cents.
Analysts who watch the industry said the problems for Borders were not surprising considering it experienced several quarters of losses and may be close to filing bankruptcy. For years the company has reported financial losses as it takes a backseat to top ecommerce retailers Wal-Mart, Target and Amazon.
Ken Dalto, a retail industry analyst, said the announcement’s timing was a bit ominous.
“This is the best time for liquidity for any retailer. If they don’t have the cash after the Christmas season, it’s a serious problem,” Dalto said.
Borders did not disclose what vendors would not be paid on time.
“As part of this potential refinancing, Borders has determined it is necessary to restructure its vendor financing arrangements and is delaying payments to certain of its vendors,” Davis said in a statement Friday. “Borders has notified these vendors and is working with them to restructure their arrangements with the company.”
In December, Borders announced it had lost more than $74 million in the third quarter, compared with a loss of $37.7 million a year earlier. Tom and Louis Borders in Ann Arbor, Michigan founded the first Borders Book Shop in 1971. In 2001, Borders formed an alliance with Amazon.com for providing content and online shopping. The company’s own ecommerce site launched in 2008 with the first e-book store opening in 2010.
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