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Posted on Thu, Apr 1, 2010 : 12:49 p.m.

Borders CEO outlines 2010 turnaround strategies for Ann Arbor-based bookseller

By Paula Gardner

The interim CEO of Borders Group Inc. outlined four key strategies for the Ann Arbor-based book retailer as it closes the financial books on 2009.

Michael Edwards, speaking on an investor conference call this morning, said he’s focusing efforts on “transforming the Borders brand and updating the business model.”

Strategies, he said, will include:

  • Improving the in-store experience.
  • Reinventing the Borders Rewards customer loyalty program, which he described as one of the largest in specialty retail.
  • Leveraging education and social media forums.
  • Growing online sales and developing strategic business partnerships.

In 2010, Edwards said, the chain will establish itself as a “neutral expert” on e-book devices.

The company will be establishing “Area E” centers in its stores, extending the existing information desks to information centers for all aspects and brands of e-readers.

“As many as 10 different models” will be sold in high-traffic stores, Edwards said, with accessories and extended warranties on e-reader products also offered by Borders.

That “Area E” center will be rolled out by fall, in time for holiday 2010 shopping.

The details on the plans for the year come a day after Borders announced 2009 results and details on two financing deals: Payoff of an outstanding $42.5 million loan and renegotiation of a line of credit in to a new, $700 million secured credit facility that martures in March 2014.

Same-store sales in the fourth quarter of 2009 dropped 14 percent, and the year’s loss was $109.4 million, down from $186.7 million in 2008.

Other changing elements at Borders stores, according to Edwards, include:

  • Shifting more personnel to the sales floor.
  • Adding more inventory in the children and teen sections of stores.
  • Shifting to more higher-margin inventory, including non-book products.
  • Providing free shipping when a customer cannot find a book in-store and orders from
  • Utilizing events and using stores as gathering spaces to build community.

No specific store closings are planned, according to the conference call. Five stores were closed in late 2009.

Meanwhile, Borders expects to soon announce the hire of an executive vice president to drive digital sales growth.

Borders stock [NYSE: BGP] is trading at $2.43 per share this afternoon, up from $1.72 at Wednesday's close of trading. The company's market cap is $145 million.

Paula Gardner is Business News Director of Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.


Gene Alloway

Sun, Apr 4, 2010 : 2:54 p.m.

What is disappointing is that book people are still not to be found at the top. Mr. Edwards has pretty much come from clothing retailers and wholesalers. Right now the Borders chain has a better selection of chocolate than they have books. Their stores are too large, not engaged product-wise in their local communities, and lack a sense of real discovery. If you want to hear customers say "wow, I never knew about that book!" like they used to in Borders store #1, then you need knowledgeable staff and buyers, smarter and more varied/customized stock (not necessarily more of it), and in house strategies to engage Amazon - not just on price. We all know shops selling new books are having a rough time of it now, but what is still lacking is innovation and customization.

Somewhat Concerned

Fri, Apr 2, 2010 : 5:02 a.m.

Outside Ann Arbor, the Borders in-store experience tends to be lousy. Staffers pick whatever obscure, weird music they like, and blast it through the store. Staffers tend to know little about books other than the latest bestsellers or Manga. Even in Ann Arbor, the experience is varied. Shelves tend to have more empty space and face-outs than books. More space for high-margin gadgets and electronics is a loser. People don't go to bookstores for either of them. More teen books? Are they big book buyers? The two Ann Arbor Borders that I visit already devote too much space to teen books and very little to business, science, or literature (other than beach books). Their online store is not nearly as good as Barnes & Nobles or Amazon. Borders doesn't seem to want to be a bookstore.


Fri, Apr 2, 2010 : 1:31 a.m.

@CynicA2-I'm with you. Does the new CEO think that this hasn't been tried before? The in-store experience? Those cheap grocery store gimmicks at the checkout lanes where soda products are being sold? Cheap impulse buying items? Greeters asking if you want a new forthcoming Dan Brown novel as soon as you hit the door last fall, but down the street at B&N magazines and books about college football flying off the shelfs! Rewards program? Constant email to save a certain percentage if I buy this week only, but no real value amounting to any type of savings, just more and a whole lot more of email! Sorry Borders, B&N is a much better experience, and the CD's are old! Why all that space? DVD's? Target $20 not $35 for the same DVD. Heck, Wal-Mart $17! If you are a bookstore, be a bookstore, focus on those who love books, alas, even book lovers have so many different choices now.


Thu, Apr 1, 2010 : 9:18 p.m.

Rearranging the same deck chairs on the Titanic yet again - financed by the same banks whose sound judgement brought us the Great Recession just a couple of years ago. Talk about the blind leading the blind! Another prolongation of the inevitable. I wonder what the vig is on that $700 million "credit facility"?

Brian Bundesen

Thu, Apr 1, 2010 : 5:34 p.m.

Nice to see the stock bump, and some hope for the future. It's at least encouraging that this CEO has a Merchandising and Marketing background, rather than just a financial person, only attempting to cut costs as the strategy to profitability. These initiatives are challenging to be sure, and no doubt similar to what has been attempted numerous times. I hold out hope that the right business mix can be found, and that Borders can survive.