A week after Barnes & Noble executives said there would be consolidation among physical bookstores, Borders Group announced plans to close approximately 200 outlets in its Waldenbooks Specialty Retail group in January. The stores to be closed, mostly mall-based, operate under the Waldenbooks, Borders Express and Borders Outlet names. After the stores are closed, Borders will have about 130 mall-based, smaller-format stores remaining. The retailer has been steadily closing mall stores since 2001, but still had 468 mall stores as recently as the summer of 2008. At the end of Borders’s fiscal year in January 2009, the company had 386 outlets in its specialty group, which generated sales of $480 million, about 15% of Borders’s total revenue. The group, however, lost $27.5 million in 2008, and Borders believes by shrinking the number of stores it can turn the remaining mall outlets into a profitable business.
Borders declined to specify the amount of revenue generated by the stores slated for closure, but in its filings with the Securities and Exchange Commission the company said that Walden stores have average sales of about $1.1 million, which would put revenue for 200 stores at about $220 million. The downsizing will also eliminate about 1,500 positions, most of which, Borders said, are part-time.
The decision to accelerate the mall closings did not come as a surprise to many in the industry since for over a year executives have been saying that they would see how to best take advantage of the fact that 240 leases for Walden stores were expiring in 2010. Another 79 mall leases expire in 2011. Borders executives also alerted many publishers of their plans before making the official announcement last Thursday.
A Borders spokesperson said the mall stores will be “fully stocked” for the holidays, but the company will begin clearance sales in mid-December that will continue into January. Simon & Schuster CEO Carolyn Reidy said she “isn’t overly concerned” that the closings will result in a flood of returns, saying she is confident the company has a plan to manage the closing process. Still, the loss of 200 outlets hurts. “I’m never happy to see the number of outlets diminished,” she said. If publishers are unhappy about losing 200 outlets, there was some good news in that Borders will finally integrate its superstore computer systems with that of Walden. The dual systems have been a source of frustration for publishers and problems for Borders. Borders expects to put the remaining mall stores on its superstore inventory and point-of-sale computer system within the first quarter.
