If you believed that Borders Group
The company released sales data for the 11 weeks ending Jan. 16. Total sales fell 13.7%, to $846.8 million. Same-store sales at Borders superstores fell 14.6%. The way the company phrased its press announcement about its Waldenbooks unit was rather telling; comps for Waldenbooks stores that will remain open beyond the end of this month fell 9.4%. These are necessary closures, of course, but they still illustrate the company's sad state of affairs.
Borders' situation is growing increasingly dire. a promotional holiday environment that was difficult for many retailers forced the bookstore giant to reduce its promotions. While that did increase its gross margin, we can clearly see that it also hurt Borders' customer traffic. In a season when Wal-Mart Stores
On a big-picture level, the competitive landscape is very difficult for Borders, which faces serious rivals in Amazon.com
As far as I can tell, Borders has its hands full simply trying to survive, let alone orchestrate a competitive counterattack.
With Borders shares trading at a buck and change, perhaps many speculative investors have bought in, thinking that a stock selling for less than the price of a venti beverage at Starbucks
Borders' business has been eroding for ages. It hasn't reported an annual profit since the year ended Jan. 28, 2006. Its revenue continues to fall at a pretty significant clip. It can't cut costs forever, customer traffic is still flagging, the competitive landscape is full of powerful contenders, and the e-book revolution is poised to disrupt its entire industry.
If Borders can't do better than this during the biggest shopping period of the year, how will it fare in the rest of 2010? Not very well, I fear.
What do you think? Can Borders survive, maybe even thrive? Are bears like me too pessimistic about the bookseller? Or do you think 2010 will be the year on Borders' epitaph? Let us know in the comments boxes below.