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Borders announces new strategic plan

The Borders Group, one of the nation’s largest book retailers, announced a new strategic plan yesterday to close nearly half of its Waldenbooks stores, sell off or franchise most of its 73 overseas superstores, sever its relationship with Amazon.com and start its own online retail site. New Borders chief executive George Jones conceded that its performance had "fallen short in an industry that is increasingly competitive, technology-driven and price-sensitive". Borders and its rival, Barnes and Noble, on Thursday disappointed Wall Street with their fourth-quarter results, underscoring the travails of traditional bookstores, which are labouring under the challenge of online-only rivals and supermarkets. The company also reported a dismal fourth quarter that ended with a loss of $73.6 million, in contrast to a profit of $119.1 million in the period the year before. “Clearly, our 2006 results were disappointing, as our company and the industry as a whole continued to face a challenging environment,” George L. Jones, the chief executive of Borders, said in a statement. “This performance is not indicative of this company’s many strengths, and it’s not where Borders Group is headed in the long run.” Borders has had difficulty competing against Barnes & Noble and discount chains like Costco in recent years, and the book business has significantly shifted to online retailing. Barnes and Noble, the world's largest books retailer, reported net income of $US127 million for the fourth quarter on sales of $US1.88 billion but missed analysts' forecasts. In a bid to regain the online initiative, Borders is to follow the example of the Waterstone's book chain in Britain by cutting links with online retailer Amazon, which has run its internet operation since 2001. Mr Jones said online retail was now in a "different situation than it was six years ago" when the company made the decision to partner with Amazon, and it could be much more profitable.

 

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