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Posted on Wed, Aug 11, 2010 : 11:27 a.m.

Borders Group lays off more employees at Ann Arbor headquarters

By Nathan Bomey

Borders Group Inc., which is battling a continuous revenue slide and massive industry changes, laid off more employees at its Ann Arbor headquarters this morning, a spokeswoman confirmed.

The job cuts come as the book store chain is placing a heavy emphasis on its new electronic books strategy in the midst of major structural challenges to its core business model.

Mary Davis, a spokeswoman for Borders, declined to specify the number of "job eliminations" at the company's Phoenix Drive corporate headquarters, which had 650 workers before the cuts.

Borders_headquarters.JPG

More layoffs hit Borders' headquarters in Ann Arbor this morning, the company confirmed.

"As we aggressively work to restore the financial health of the company, we have reorganized core areas of our business to ensure that we have the necessary resources in place to support our strategic initiatives," Borders said in a statement Davis provided to AnnArbor.com. "As part of this process, we have made changes to our staffing levels so that the right people are in the right positions and that those positions are aligned with our strategic objectives.”

In January, Borders laid off 88 corporate workers in Ann Arbor after a disappointing holiday sales season.

The latest layoffs come two months after tobacco executive Bennett LeBow became the fourth CEO of Borders Group in less than two years. LeBow, who became chairman of Borders in May after investing $25 million in the company, has since asked Borders' Board of Directors to give him the right to purchase an additional 35.1 million shares of the company's common stock.

If he exercised that right - which occurs through an investment vehicle called stock warrants - LeBow would own 35 percent of the company, and New York-based hedge fund Pershing Square Capital Management could own up to 31 percent.

LeBow's vision for Borders' future hasn't been made clear since he took over leadership of the company. It was also unclear whether LeBow ordered today's cuts.

Davis this morning said in an e-mail that LeBow "does not do media interviews."

Michael Edwards, the CEO of Borders Group subsidiary Borders Inc., also wasn't available to discuss the cuts, Davis said.

Borders reported a net loss of $64.1 million in the fiscal quarter ended May 1. The company's first-quarter loss was down from $86.0 million in the first quarter in 2009, but same-store sales at Borders' super stores in the U.S. dropped 11.4 percent. The company's total revenue dropped from $650.2 million to $547.2 million.

Borders stock (NYSE: BGP) was down $0.03 to $1.26 at 12:02 p.m. today.

Borders' top book store competitor, Barnes & Noble, which is considered the healthier of the two companies, put itself up for sale last week as industry challenges persist.

Both companies are struggling to compete on price with online retailers like Amazon.com and big-box retailers like Wal-Mart and Target.

In electronic books, Apple's iPad has already carved out a 22 percent share of the market, and Amazon recently said sales of e-books for the Kindle e-reader recently surpassed its sales of physical hardcover books.

For its part, Borders is selling an e-reader developed by Toronto-based Kobo Inc., which also created an e-book store for Borders. Borders said recently that it hopes to secure 17 percent of the e-books market within a year.

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.

Comments

stunhsif

Sat, Aug 14, 2010 : 9:57 a.m.

They will go the way of Blockbuster and others whose business models have simply run their course. They are trying to sell a Hyundai priced like a Mercedes. Especially in these tough economic times, people are not going to pay 40-60% more for something with the benefit of being able to sit in an overstuffed chair and buy a cup of coffee for 3 bucks. I'll buy the same book or dvd at Target/Wal-Mart or Amazon and go home to my cozy couch and drink my 25 cent cup of coffee. I have nothing against Border's, my wife does buy from them several times a year but I never will.

Klayton

Fri, Aug 13, 2010 : 9:43 p.m.

My heart goes out to these employees as well. Knowing this, I will do my best to buy from Borders rather than Amazon in order to support my friends in the local community.

Brian

Fri, Aug 13, 2010 : 6:57 a.m.

as another Borders Alumni, I echo the comments and sentiments of @UofM_fan and @sunnyday. A Business Week article of a couple years ago said it best when they said that Borders is already dead, they just don't know where to bury the body. The most unfortunate fallout is the fates of the smart and dedicated employees who are left with managing this once great company in what must be the atmosphere of a mortuary. The revolving door leadership at the very top of the organization has been shameful, to put it mildly. It's also become sadly clear that the current leadership has absolutely no vision or direction that anyone can rally around. I don't know what's going on in the Exec Suite, but you can be sure that it's not much more than a scramble to get themselves into whatever lifeboats may be left. My heart goes out to the employees who put their heart and soul into the company, only to ultimately get kicked to the curb.

UofM_Fan

Fri, Aug 13, 2010 : 6:21 a.m.

Like Sunnyday said, this has been a long time coming. I too worked there for many, many years and the problems that plague Borders now have always been there and never addressed. The constant re-orgs, the rotating door for the CEO, rewarding short-term "success", ignoring long-term planning. The list goes on and on. The "leadership" (and that is a generous use of the term here) have been short-timers for years. They come in, throw away everything that was in place before and do what they can to make as much money for themselves and then leave. For well over a decade executives have pillaged the company for their own financial gains. The company is doomed. When I worked for them there were well over 2000 employees at the headquarters and even then we were short-handed. How on earth can they hope to keep on top of the day-to-day tasks AND make the needed changes to save the company with probably fewer than 500 people there now? Maybe they can move everyone into the original tower and lease out the expansion tower? No, I've seen the executive suites in the expansion, LeBow wouldn't want to give up the luxuries.

sunnyday

Thu, Aug 12, 2010 : 8:38 a.m.

The trouble at Borders began many years ago when they bought Waldenbooks and then found that they had to literally bribe Walden employees to move to Michigan. The bribes included high-level jobs for former low-level employees of Waldenbooks, a very different kind of business, where the book-buying technology was far inferior to that developed by the Borders brothers. The company has had a string of incompetent and self-serving leaders since Bob DiRomauldo left. Those of us who have worked there have seen this coming for a long time. It's very sad, but it was inevitable.

McGiver

Thu, Aug 12, 2010 : 6:30 a.m.

Taxpayers just spent 26 billion to help states and municipalities save government jobs. Many times that to bail out union jobs at auto companies. And many times that for banks. I guess Borders didn't spend enough money on lobbies or donate enough to campaigns to elect these fools we have in Washington. In some areas of our capitalistic system, we let the market do what it is supposed to do - allow bad businesses to fail. That frees up capital to invest in better businesses.

David Bardallis

Thu, Aug 12, 2010 : 12:13 a.m.

If only they would hire more vice presidents and consultants, I'm sure it would turn things around. Yeah, that's the ticket.

drew_blows

Wed, Aug 11, 2010 : 10:19 p.m.

How does an article about layoffs at Borders lead to viewer comments about the evil government unions(and the staff not delete them for being off topic). Here's why the government cant reduce spending.....its supporting everyone not working. I will say it once again, if the government unions are providing such great benefits and a great workplace why arent you working for the government. Let me guess you are also the person that if you see a $20.00 bill lying on the sidewalk you dont pick up it because it doesnt belong to you. Get off you uninformed high horses and get back to you entry level dead end jobs and quit crying about what others have.

GreenEggsandHam

Wed, Aug 11, 2010 : 6:46 p.m.

I always thought borders was over priced, $30.00 DvDs that you could buy down the road for $10.00. Think they did it to themselves.

David Briegel

Wed, Aug 11, 2010 : 6:42 p.m.

Everyone knows that unions are evil. Fiduciary Responsibility is non-existent. Mismanagement is the current trend. Nary a complaint! Just allow the billionaires to pick the carcass of the middle class and poor. Nary a complaint! A2.com moderates!

Lokalisierung

Wed, Aug 11, 2010 : 6:11 p.m.

"Doesn't AnnArbor.com have a policy to remove comments that are factually inaccurate? How does snapshot's (off-topic) assertion stand?" Not really. Plenty of topics, such as Unions, are fair game as bashing goes on in many threads whether the comments or on topic or off, factual or an opinion.

perfectly lubricated weather vane

Wed, Aug 11, 2010 : 4:28 p.m.

Doesn't AnnArbor.com have a policy to remove comments that are factually inaccurate? How does snapshot's (off-topic) assertion stand? > government unions want to raise [their] taxes

Lokalisierung

Wed, Aug 11, 2010 : 4:11 p.m.

"Its very sad that Annarbor.com continues to attack Borders..." It's called reporting, not attacking.

ChrisW

Wed, Aug 11, 2010 : 4:09 p.m.

You don't need 500 stores to sell e-books so their cost structure is out of line. I don't see how Borders will pull out of this unless the publishers back them to protect against Apple and Amazon dominance. I love my iPad. I can carry hundreds of books with me anywhere I go. I remember when all of the old photographers said that digital cameras would never replace film and now Kodak doesn't even make Kodachrome any more. Borders will go the way of Blockbuster and Kodachrome unfortunately.

LuLu

Wed, Aug 11, 2010 : 3:30 p.m.

Its very sad that Annarbor.com continues to attack Borders given it employs 600 people in your home town. Makes you wonder why any company would stay in Michigan.

xmo

Wed, Aug 11, 2010 : 1:42 p.m.

Why do companies lay-off and cut budgets but governments (City,State and especially Federal) cannot reduce their spending.

Dave

Wed, Aug 11, 2010 : 1:01 p.m.

The link to the "e-book store" is bad.

Greggy_D

Wed, Aug 11, 2010 : 12:46 p.m.

The marketplace changed and Borders did not adapt. Why pay $20 for a book from Borders when Amazon has it for $11?

Nathan Bomey

Wed, Aug 11, 2010 : 12:24 p.m.

@expioneer Interestingly, Borders is moving decisively away from music and movies. In fact, most Borders super stores have significantly slashed their inventory of DVDs and CDs. More on that in this story from November: http://www.annarbor.com/business-review/borders-future-in-tumultuous-book-market-shaped-by-economy-technology/

Top Cat

Wed, Aug 11, 2010 : 12:16 p.m.

To paraphrase Yogi Berra, if people don't want to go book stores any more, how are you going to stop them?

expioneer

Wed, Aug 11, 2010 : 12:10 p.m.

I have 3 Barnes and Noble stores within 10 minutes of my house while the nearest Borders is a half hour away. Borders keeps sending coupons that are only good for 3-4 days and with a full-time job I just cannot get there at Borders' convenience. Also, I have a hard time finding the books hidden behind the coffee cups, toys, cards, pens and other miscellaneous junk. Borders needs to remember it's "BOOKS and music, not "stuff and occasionally books" and desperately needs a new marketing plan. They are killing themselves.

Nathan Bomey

Wed, Aug 11, 2010 : 12:09 p.m.

DailyFinance.com on today's Borders news: http://www.dailyfinance.com/story/company-news/borderss-fifth-round-of-2010-layoffs-hits-corporate-office/19589591/

Barb

Wed, Aug 11, 2010 : 11:47 a.m.

@15crown00 - People keep saying that but they keep sticking around. I wouldn't count them out until the fat lady sings. I am, however, very sad they're doing more layoffs.

snapshot

Wed, Aug 11, 2010 : 11:47 a.m.

Government unions need to take notice of this real world economic phenomenon ocurring with Ann Arbor's Borders. The Borders folks are dedicating talent and resources to becoming competative in an ever competative economic climate. They don't want to lay people off to pad their own pockets but are "forced" to reduce their costs to maintain their economic viability. Why are they struggling? Because other folks are suffering financial losses and are reducing costs so "they" can remain economically viable. This is a concept which escapes the "union" mentality which is "we don't want to suffer like everybody else" to paraphrase the UofM Lecturers union leader in another annarbor.com article. Unions don't seem to realize that these economically forced "austarity" measures "reduce" the taxpayer "pool" that supports government and its unionized workers. Business "as usual" is not an option anymore. These Border folks being layed off are suffering and government unions want to raise their taxes to support the status quo. Talk about unfair labor practices. It's time we all speak up and let our politicians and the government unions that we want changes made to reflect the economic realities of folks losing their jobs, pensions, and homes. Without government cost reductions we, as a nation, will not recover from this financial crisis which has become a "global" epidemic.

15crown00

Wed, Aug 11, 2010 : 11:39 a.m.

it's sliding fast and soon it will disappear