Bookstore Keys: Borders Declares Bankruptcy
Today Borders officially filed for Chapter 11 bankruptcy citing a debt of $1.25 billion and supposed assets of $1.275 billion. Publishers and distributors are owed some $230 million. Over the next few weeks, Borders will be closing 30% of its stores or about 200. No news yet that Flowood’s Borders will be one of those. (Scroll down for full list of publisher creditors.)
At the present time, interpreting future landscape of book selling is difficult.
My first question, asking myself, is where will all the books go that are now on Borders’ book shelves. As stores close, will inventory be shared to the remaining existing stores? A logical guess. Will an extensive amount of inventory be returned to the publishers to pay outstanding bills? How much of Borders’ unpaid bills will be written off by the publishers, thus causing more pressure to booksellers who pay their bills. Will huge closing sales take place across America increasing the already exorbitant discount of my product?
My big question is why the publishers let Borders escape from paying their bills on time? I cannot fathom the size of the bath the publishers will take. I ask why? It doesn’t seem that Borders’ continual deep discounting of books they aren’t paying for has helped our book selling cause. I feel this publisher tolerance has erased value on all levels of legitimate book selling.
Just this November, I made an envelope addressing mistake on a publisher’s address. My check was lost in the mail, my slight error could have been caught by an astute postman, but it wasn’t. My favorite publisher, the one I try to pay first and foremost on time, threatened to cut off my account. I was beginning to run 30 days past due. When hassled, I knew I wrote the check and mailed it as soon as I could. Stopped shipments from this company would have been disastrous for Lemuria’s Christmas season. Fortunately, intervention from inside company aids kept my account temporarily open, until my check was returned, address error corrected and check then resent, thus clearing up my problem. I must add, I still was not 60 days past due.
My point is why a small bookstore paying its bills regularly is hassled and threatened while Borders owes and refuses to pay such a huge amount. Why didn’t the publishers demand results from Borders sooner? They were sure quick to pull the trigger on me. It will be interesting to see how the publishers answer this question about their tolerance over the next few weeks.
As Borders falls, I hope the publishers learn from their mistakes. Maybe their philosophy will become one of supporting real book selling with team work, and local community book selling will be enhanced.
Publishers helping the bookstores that pay their bills to make more money could be a starting foundation to rebuild our industry.
Here is the full list of publisher creditors:
Penguin $41.1 million
Hachette Book Group $36.9 million
Simon & Schuster $33.75 million
Random House $33.5 million
HarperCollins $25.8 million
Macmillan $11.4 million
Wiley $11.2 million
Perseus $7.8 million
F+W Media $4.6 million
Houghton Mifflin Harcourt $4.4 million
Workman $4 million
McGraw-Hill $3.1 million
Pearson Education $2.8 million
NBN $2 million
Norton $2 million
Zondervan $1.9 million
Hay House $1.7 million
Elsevier Science $1.6 million
Publications Intl. $1.1 million
The Bookstore Key Series on Changes in the Book Industry
Finding “Deep Time” in a Bookstore (March 8th) Reading The New Rules of Retail by Lewis & Dart (March 3) The Future Price of the Physical Book (Feb 18) Borders Declares Bankruptcy (Feb 16) How Great Things Happen at Lemuria (Feb 8th) The Jackson Area Book Market (Jan 25) What’s in Store for Local Bookselling Markets? (Jan 18) Selling Books Is a People Business (Jan 14) A Shift in Southern Bookselling? (Jan 13) The Changing Book Industry (Jan 11)
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Written by John
11 responses so far ↓
1 d-ashes // Feb 16, 2011 at 11:50 am
Here’s the list of store closings. Flowood isn’t on it:
http://www.scribd.com/doc/48960742/Borders-Closures
Not yet….
3 Matt Staggs // Feb 16, 2011 at 12:19 pm
I would suspect that these large chains turn over a bigger profit than a single indie, and thus, their creditors are willing to extend a little more forbearance. Also, I’m imagining that these same publishers/creditors are more heavily invested with Borders and are likely to lose a lot more money if they play hardball. Losing a small investment (relatively speaking) with an indie won’t hurt them as much.
Sure, but I think what people our age (30 something) don’t realize is that these large companies don’t have to act this way. There was a time in our industry, and not to long ago, when publishers really valued the independents – sales reps got better, better authors were sent on bigger book tours, accounting departments picked up the phone… It is possible that was is long term and sustainable might be valued by publishers instead of out of control box stores for instance.
5 Jeanie Clinton // Feb 16, 2011 at 12:31 pm
I don’t think Borders accumulated this debt last month…or even last season. The handwriting has been on the wall for a long time. And yet, as you illustrate with your ‘lost in the mail’ example, the publishers haven’t come up with any kind of rating system for their valued customers (booksellers of all sizes and shapes). For example, Lemuria might fall into a A+ rating, because they’ve paid their bills on time and in full for over 35 years. They would then be in a “Preferred/Valued customer” status with a publisher…no matter what their volume was.
The box/big chain bookstores have been given preferrential treatment because of their volume orders and co-publishing deals, despite the fact that their payments may not have been timely or in-full.
This business practice does not stand the test of time nor customer loyalty. Maybe now they will take a closer look at their business relationships.
6 Tracy Lucas // Feb 16, 2011 at 12:31 pm
The publishers may be reacting so immediately precisely *because* of the whole situation with Borders. There’s no way Borders got into that mess overnight.
I’m pro-indie, but it still hurts to see any bookseller fail. I hate that.
7 Neil White // Feb 16, 2011 at 1:08 pm
John,
You can add “Mississippians” (though only $3,600) to that creditor list. Lemuria paid in 3 days!
Neil
Editor, Mississippians
8 michael potts // Feb 16, 2011 at 5:14 pm
please don’t underestimate yourself or your staff.all of you are dialed in,as opposed to big box stores who can’t find their butt with both hands.
9 Wendy // Feb 16, 2011 at 7:41 pm
Wow. The numbers John lists are staggering.
Hopefully other corporations will take note of Borders demise, stop taking their crazy pills and realize that they are not untouchable.
10 Jeanie Clinton // Feb 17, 2011 at 8:08 am
Times Picayune article this morning announces both New Orleans Borders stores closing. Tom Lowenthal of Octavia Books calls it a victory for small business!
11 Bookstore Keys: Borders’ Bonuses // Mar 30, 2011 at 11:17 am
[...] Borders is in the process of dumping heavily discounted books on the market. In local markets where this is taking place, retail book value is crashing for this limited time period until actual closing takes place. I presume that most of this devalued inventory was not paid for since inventory debt to the publishers is now frozen. Borders is able to raise their capital reserves since they did not pay for much of the product they are selling. (see previous blog with publisher debt figures) [...]
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