LJNDawson.com, Consulting to the Book Publishing Industry
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Borders on the Brink

Yesterday Borders issued Pershing Square Capital 5.15 warrants because it failed to find a buyer by a previously-set deadline of October 1. And no wonder, in this market.

The question is, now what? Borders is frantically cutting costs - adjusting hours, slashing inventory, and renegotiating distribution deals. That saves $120 million per year over what their costs are now...but they won't even see that savings until the end of 2009.

Finding a buyer right now is not a very promising prospect. How do they hold on? Physical retail is so tough because so much is predicated on real estate - for your shops, for your inventory. And who knows when that market is going to gain some traction again. Add to that the forecast that folks are not going to be doing a lot of holiday shopping this year - which for bookstores is fundamental to survival - and things look grim.
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