This article, by Greta Guest, originally appeared on the Detroit Free Press site.
Borders Group Inc. shares languish below the price of a candy bar, its new CEO is closing stores and slashing payroll and turnaround experts differ on its fate.
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The Ann Arbor bookseller reports fourth-quarter results next week. And the expectation is for more multimillion-dollar losses, turnaround experts say. Borders said its holiday sales at stores open at least a year fell 14.4%.
Shareholders will hear more about the company’s strategy next Wednesday when CEO Ron Marshall hosts a conference call with analysts and investors.
What they know already is that the retailer is in danger of being delisted from the New York Stock Exchange. Its shares closed Tuesday at 64 cents, down 60% in the four months since it announced it was no longer for sale.
Meanwhile, chief competitors have seen huge gains in share prices. Amazon is up 71% to $72.70 and Barnes & Noble, thought to be Borders’ most likely suitor, has risen 53% to $23.01.
Borders has been cutting costs in the past year while spending big on an e-commerce site. It has announced some store closings including the downtown Detroit and Chicago’s Michigan Avenue stores and cut 1,152 jobs. The company employs 27,000 at more than 1,000 stores.
Ken Dalto, a Farmington Hills-based turnaround expert, said Borders’ strategy seems to be one of buying time and hoping economic recovery is just around the corner.
"They are figuring their brand name is going to carry them," Dalto said. "Brand names mean less with the inroads of technology. The brand name is Amazon."
Dalto said staffing cuts and dropping small things like free bookmarks could hurt the in-store experience.
"It is a self-liquidation," he said.
Jim McTevia, managing partner of Bingham Farms-based McTevia Associations LLC, a turnaround firm, said he thinks Borders could seek Chapter 11 protection, but it wouldn’t solve the bookseller’s business problems.
"Depending on their ability to get debtor-in-possession financing, they could easily file for Chapter 11," he said. "It is much easier to facilitate the sale of a troubled company under bankruptcy protection."
Read the rest of the article on the Detroit Free Press site.