By DAVID RUNK updated 1:48 p.m. PT, Thurs., March. 20, 2008
DETROIT – Borders could become the latest victim of the credit squeeze, announcing Thursday that it may put itself up for sale. Rival Barnes & Noble, meanwhile, saw fourth-quarter profits drop 9 percent as the industry struggles with intense competition from discounters.
Shares in Borders tumbled more than 39 percent as the nation’s second-largest bookseller said it was considering options including the sale of the company or certain divisions, and that it had lined up $42.5 million in financing to help it keep running through the year.
“It’s a crunch of three C’s_ credit, capital and consumer spending,” said Dan Ansell, a partner at Greenberg Traurig LLP and chairman of its real estate operations division.
Despite its earnings slide, Barnes & Noble boosted its dividends and surprised Wall Street with predictions of a profitable first quarter. Analysts said the nation’s largest book seller would be the most likely suitor for Borders.
Both big bookstore chains have deepened discounts for their members, as shoppers are even more focused on low prices for discretionary items as they pay higher gas and food costs.
But analyst Michael Norris at market research firm Simba Information said customers are increasingly turning to wholesale clubs and other discounters like Target Corp. and Wal-Mart Stores Inc. for books and other merchandise.
“This is going to be a really tough year” for booksellers, Norris said.
Stacy had originally posted this on her blog, and since I still can’t comment there, I’m posting it here instead.
Which do you do more of?
Do you shop at Borders, or the other place instead?
I have to wonder how much eBook sales are affecting the decline in sales at major book stores. Personally, I buy 90% of my books in eFormat, because my only other option is Wal-Mart (as I’ve mentioned before, I’m an hour away from a Borders/Barnes) and not only is their selection limited, but I’m somewhat morally opposed to buying all my books from there.
If I’m in the area, or out shopping with friends, my preferred chain is Borders. I think the ambiance is better, and the customer service is far better than that of my Barnes.
Regardless, I think online ordering and eBook sales are having the biggest impact. I think Borders would do better to start offering eBook sales through their website (no idea if this is even possible, or it’s already in the works) or, even better, books through their website. They’ve partnered with Amazon to order books online, but unlike Barnes, they don’t offer sales/shipping direct through their site.