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In this particular case, you could tell the book by its cover.
Borders Group Inc., the nation's second-largest bookstore chain, recently began a bankruptcy court-approved liquidation sale at its remaining 399 stores. The Ann Arbor-based company, which has been in business for 40 years, filed for Chapter 11 protection in February with debt of $1.29 billion and assets of $1.28 billion. Borders had borrowed $505 million to continue operating and to restructure its operations after the court filing.
But the handwriting had been on the wall for quite a long time, as Borders' market value reportedly had fallen by $3 billion since 1998. At the chain's peak in 2003, Borders Group operated 1,249 Borders and Waldenbooks nationwide. Now, up to 11,000 Borders employees may soon be out of work.
"Our industry is changing quite a bit, and it's a challenging time for bookstores. Borders was in a weaker position in the industry. There have been a few bookstore companies that were overleveraged or in a weaker position, and in a changing environment like this, they are the ones that are first to be affected. It was a combination of their own situation putting them not in a good position to deal with the changes in the industry," said Bill Fehsenfeld, co-owner with his wife, Cecile, of Schuler Books & Music.
Retail analysts have said a key reason Borders failed was that it mishandled its online sales at a critical time. Fehsenfeld agreed, but he also noted that wasn't the only cause for its demise.
"They outsourced their website to Amazon for a period of time. Then they ended that relationship and tried to start up from scratch at a point when they were significantly behind Barnes & Noble. In that regard, that's one issue with their situation,"...