Borders Group Inc. seems to be in free fall.
According to a New York Times report by Julie Bosman, yesterday the company compounded anxiety about its future by announcing that it “was not in a liquidity crisis and that its stores were well-stocked” — this despite a press release four days ago in which it announced that it was experiencing a “liquidity shortfall” (see yesterday’s MobyLives report), and despite numerous reports that stores were looking low on inventory … which seems likely as several major accounts have stopped shipping books to the chain since its announcement.
Meanwhile, while the company gives out contradictory statements that it’s not have cash problems but that it isn’t paying accounts either, Bosman reports that it will be holding “hastily arranged meetings in New York later this week” with major publishers at which company CEO Mike Edwards will be present. A spokesman explained “We value our relationships with them, which is why we’re engaging in discussions with them.”
Whatever. The wheels seem to be flying off the vehicle. As Bosman’s report continues: The company “will enter the talks without two top Borders executives whose resignations were announced on Monday: Thomas D. Carney, the company’s general counsel; and Scott Laverty, the chief information officer.”
As Jeffrey Trachtenberg reports in a Wall Street Journal story, the resignations — which the company revealed not in any public admission of turmoil but only through a filing with the Securities and Exchange Commission made public yesterday — are “a new sign of turmoil amid the retailer’s dire finances.”
Asked for comment, a Borders statement to the paper would say only, “We have evaluated our leadership structure and, as a result, some positions have been eliminated.”
All of which was thrown into stark relief yesterday by the news that Barnes & Noble had experienced phenomenal sales during the lead-up to Christmas, including the “largest retail sales day ever in the company’s nearly 40-year history on December 23, 2010,” according to a company press release.
Nonetheless, something important things to note about the Borders collapse: While more publishers than have been reported have stopped shipping books to BGI, one of its very biggest suppliers, the wholesaler Ingrams, announced it would continue supplying the chain, accordng to Trachtenberg.
Then there’s the fact that they obviously must have some confidence that the tactic of withholding payments from accounts will force a re-negotiation of debt payments. After all, they haven’t declared bankruptcy yet.