Borders trouble, could lead to BIG TROUBLE!

[Erik Mona]

We're aware of the situation and monitoring it closely. From what I have heard so far, one side effect of this is that Borders is not flushing inventory into returns as they usually do after the holidays, so they can keep their stores full of books. That ought to offset some of the oomph from a potential closure, but there is talk of last-minute funding, backroom deals, etc.

It's a cause for concern, but not something we expect to cost us anywhere near $100,000, as someone above suggested.

--Erik Mona
Publisher
Paizo Publishing

 

[NewJeffCT]

OTOH, if people decide to become social again, you could see the resurgence of the local book (and hobby) stores.

One sign of this: despite the hardships of the big chains, I've noticed several small stores expanding.

Unfortunately, in my area (Hartford CT area), the two closest FLGS have closed within the past few years - the venerable War & Pieces as well as The Dragon's Lair, both in West Hartford, CT. Now, I have to go across the river to The Time Machine in Manchester, CT, which has a small RPG & wargaming room as well as a tremendous amount of other hobby stuff (they have a huge model railroad display on their second floor)

On the plus side, the nearest Games Workshop store closed a few years ago as well... however, it was recently replaced by many of the same employees under the name The Battle Standard. It's still primarily Warhammer, but they do have some RPG stuff and I think they have D&D Encounters their weekly.

Only problem for me is that with my work location/schedule, both The Time Machine & The Battle Standard are not do-able during the week.

 

[Stormonu]

We're aware of the situation and monitoring it closely. From what I have heard so far, one side effect of this is that Borders is not flushing inventory into returns as they usually do after the holidays, so they can keep their stores full of books. That ought to offset some of the oomph from a potential closure, but there is talk of last-minute funding, backroom deals, etc.

It's a cause for concern, but not something we expect to cost us anywhere near $100,000, as someone above suggested.

--Erik Mona
Publisher
Paizo Publishing

"Flushing inventory for returns" - does this mean that places like Borders still use the model that they can return slow/not-moving stock back to publishers like the days of TSR? I did not think that either WotC or Paizo were on this model but that it was something that came out of using the likes of Random House book publishing.

 

[Krensky]

Uhm do you have links for that? Because I'm pretty sure Kmart didnt buy Sears, in fact Kmart was in trouble for a while.....

Sears Holdings Corporation - Wikipedia, the free encyclopedia

Sears, Kmart to Merge in $11B Deal (washingtonpost.com)

It was called a merger, but it was initiated by Kmart. Kmart investers got a 1:1 share swap to the new company, Sears investors got a 2:1 (ie they got one share of Sears holdings for every two shares of Sears & Roebuck they owned) swap.

Kmart bought Sears.

 

[Treebore]

Bankruptcy is far from being Borders problem, the crappy owner management is what will kill them.

Done right bankruptcy will not only save them, but allow them to come back stronger than ever. BUT you need good management behind the bankruptcy for that to happen.

 

[Erik Mona]

Absolutely. Everyone selling into mass market retailers is doing so on a "returnable" basis. Computerized inventory and razor-thin inventories has meant that distributors and bookstores carry less risk than they did in the TSR days (almost all of that inventory risk is now shouldered by publishers), but near as I can tell there is no way to sell on a non-returnable basis to mass market retailers.

The reality is that a place like Amazon.com seldom orders more copies than they need, so the risk of getting hammered by returns from them is fairly low.

Sales through hobby shops and comic stores (the "direct" market) are on a non-returnable basis, with the retailer shouldering a great deal of the inventory risk. Consequently, most stores order very close to their expected sales, so as not to tie up too much of their money in unsold inventory.

--Erik Mona
Publisher
Paizo Publishing

 

[Joshua Randall]

I think it's also pretty fair to say that both Paizo and WotC are far better managed than TSR was. So like I said above -- yeah, this is bad (esp. for Borders) but not catastrophic.

 

[Puggins]

To address the OP's concern, I think Wizards, Paizo and other companies operating on Account with Borders are likely not in any horrendous trouble (I say this with crossed fingers).

In either type of Bankruptcy (Chapter 11 restructuring vs. Chapter 7 liquidation), Stakeholders owed on account (in this case, involving product that has already shipped) have a rather strong claim, meaning that they'll likely be compensated for a substantial amount of their claim. In chapter 7 they'd probably recover close to all of it. Chapter 11's get a bit trickier, but they'd probably still come out with a good result. The stockholders and the entities holding subordinated debt will take the biggest bath.

 

[cignus_pfaccari]

Man, and I just started using those nice 50% off coupons, too.

I do prefer B&N, mostly because they've got a location by my work and by my apartment, like they're stalking me or something.

Brad

 

[Eridanis]

Borders has been in trouble for some time. Their 5 year stock price had a high of $25 and it's now trading at just under a dollar. It sucks to be an employee there if they had bought into any kind of DRIP plan or employee stock purchase plan.

I was a Waldenbooks employee at the time that Borders and Waldenbooks were integrated. They offered to sell Borders stock to employees to get them a little more "integrated" with the company. I ran far away from that deal, and it's clear I made the right decision.

Kmart bought Borders so that they didn't need to start their own bookstore superstores to compete with B&N's push in that direction. They hoped that all that knowledge would come with the acquisition, but my understanding is the founders of Borders (which was, at the time, a regional chain of superstores) jumped ship rather than continue on. Kmart saved on not having to spend startup costs for a new chain (it was to be called Bassett Books; I think they only ever opened one or two stores), but didn't get the leadership vision they'd counted on.

I preferred Borders to B&N, as in my experience Borders had a wider selection; but B&N has been a pretty savvy operation for over a century, and while they're in a fight with Amazon, it's a fight they can wage over the long haul. It seems Borders just doesn't have the management or vision (or cash flow) to keep themselves current in the 21st century.