Weakening economy and higher borrowing costs were raised as the issues why Borders, the American-owned bookstore chain, were showing slowing sales and losses in seven of the last eight quarters. Borders could be up for sale after it suspended its dividend and hired advisers to review options for the business.
Chief executive George Jones said: "We will be slowed in our progress and expect that we'll reach them later than originally anticipated. Still, we believe that our strategic plan remains the right path toward achieving these goals. The company is determined that additional capital was required to execute our operating plan. The current credit environment has made many of these alternatives prohibitively expensive or entirely unavailable.”
Pershing Square Capital Management, Borders' largest shareholder, has agreed to bail it out by lending it $42.5 million and making an offer for some of the bookstore chain's international businesses.
The company faces stiff competition from online retailers and grocery stores for sales of books, CDs and DVDs. Shares have dropped by 66% in the last year.
Borders reported a net profit of $64.7 million (£32 million) in the three months to the end of December compared with a loss of $73.6 million (£36.8 million), a year earlier when it took large charges associated with the closing of Waldenbooks stores. (source: Timesonline)