Will Barnes & Noble buy Borders Books?

Book NewsIn a first quarter earnings call, Barnes & Noble indicated that it was contemplating the purchase of Borders Books. They didn’t just come out and say this but it’s pretty easy to decipher the doublespeak and read between the lines.

The retailer also said it has put together a team of senior executives and financial advisers to study “the feasibility of a transaction” with rival Borders Group Inc, but it declined to say if it had been contacted by Borders’ bankers.

The feasibility of a transaction? Oy! Translation: We’re thinking of buying Borders Books.

Not to be outdone, Borders responded with a marketing masterpiece.

Borders issued a statement on Thursday saying that the company is “in the midst of the strategic alternatives process and has not engaged in substantive discussions regarding any specific transaction to date.”

As a marketer I can spot gems like these a mile away. Translation: We’re looking for some way out of this mess and haven’t had the big talk with Barnes & Noble. Sure, maybe a few conversations here and there and a coffee or two but it’s nothing serious, it’s totally casual … so far.

So the strange mating dance seems likely to continue.

Perhaps this news was meant to distract from Barnes & Noble’s first quarter earnings. They came in on the low end of guidance, with sales edging up 1.1% but same store sales decreasing 1.5%. At some point you can’t rely on new store openings. However, congratulations are in order to BN.com who posted a 7.2% increase.

Of particular interest to me was the following statement:

During the first quarter Barnes & Noble reached an agreement in principle with the State of California (subject to final Board of Equalization review and approval expected at the end of May) to settle its long-standing dispute regarding the collection of sales and use taxes on sales made by Barnes & Noble.com from 1999 to 2005. As a result, the company recorded a one-time pre-tax charge of approximately $8.3 million.

Here’s hoping California puts this money into public libraries or education.

Finally, Barnes & Noble blames J.K. Rowling for their expected second quarter downturn.

Additionally, due to the difficult comparison against last year’s July release of Harry Potter and the Deathly Hallows, second quarter comparable store sales are expected to decrease in the low to mid-single digits.

I know it’s true, but it all sounds a bit whiny and juvenile. “Couldn’t you write another book? Pleeeeeeaase?!”

Will Barnes & Noble buy Borders Books? I’m guessing they will, providing bookstore homogenization throughout the USA.

15 thoughts on “Will Barnes & Noble buy Borders Books?

  1. From the front lines, those “strategic alternatives” included getting rid of managers and supervisors, eliminating the employee gift card of $25/mo. for full time employees, eliminating time and a half for all employees working holidays and the thing that is guaranteed to save their rosy butts — charging employees 35 cents for tea and coffee that had been previously free.

  2. Ouch. Alex, glad to hear from the front lines but sad to hear that Borders has cut back so far on employee benefits. Customer service is a big deal in retail and even more so in books in my opinion.

    This seems a REALLY short sighted ‘savings’ that will ultimately cost them sales. Unhappy employees create a negative atmosphere. Despite best efforts, employees will be slightly less motivated to help the next customer who asks to find “that new book, by that popular author, who was featured in a big magazine.”

  3. I agree with Alex, I am also from the “front lines” and everything he or she says is correct – they have also cut our hours back for part-time and full-time employees by as much as 5-20 hours per employee. Even my supervisor got cut 5 hours last week. We have also been vigorously sending back music and book product to the vendors in order to get quick credit back at the expense of our empty bookshelves and music/DVD units – when the customers come in and ask for that one cd or book that they need for Father’s Day we won’t have it – guess we’ll have to send them to B&N – the morale is really low at my store because of all these cutbacks, unhappy employees do not create sales on the bookfloor – I’m afraid they will see these changes effect sales rather quickly.

  4. Asher,

    Thanks for contributing to the news from the “front lines” of Borders Books. This certainly doesn’t sound like any fun. The cut in employee hours seems short-sighted but I could see my way to understanding it from a bean-counter perspective. I still wouldn’t do it because happy employees breed happy customers.

    But the sending of product back to vendors for quick credit – essentially raiding the shelves for quick cash – smells of desperation. I agree that they’ll likely see these changes effect sales quickly. The ‘cuts’ will wind up coming from both cost and revenue.

    Thanks again for the update and insight!

  5. On June 2nd Borders eliminated 156 corporate positions throughout virtually all departments at their Ann Arbor headquarters and 118 corporate positions outside the headquarters – virtually the entire Field Marketing organization and Corporate Sales division.

  6. Borders has now also asked their stores to return all office PC’s but one. Guess they couldn’t pay for them. Paperchase is also losing money, and is a big waste of space.

  7. Pingback: Borders Books Sells Australian Stores

  8. Not only has Borders cut jobs in their corporate office and field positions, but they went through and restructured the management at store level, many supervisors and managers lost their jobs or were demoted – this happened around the time that Borders was working on the deal with Pershing Square. This has effected the morale and the operations of the store, some managers are having to do two jobs for the price of one. I can’t even imagine how the corporate office and field was effected by this. The employees that are still there must be wondering if they are next, and must be stressed out due to the extra workloads imposed on them.

    Just this week managers have been asked to cut back on supply ordering, and necessary repairs are not being completed. If Borders is planning on trying to be its own company, they should have the foresight to make sure that they take care of the properties, their people and their customers – and that is not happening.

  9. My brother works for Borders and he said that they have just cut out the employee of the month program (probably because there was a $25 gift card given to the recipient). He is currently looking for another job because they have cut his hours so much, everyone on his staff has had their hours cut except the store manager and the assistant who are on salary. I would be surprised if B&N does buy Borders in the shape that it is in now, it would not be a wise investment. Better if they waited and let the dust settle.

  10. Borders fires there dave Carpenter winner for 2005 because he cares about the customers. now they want to go to St Charles Ave. with no one that knows the city of New orleans. Is getting rid of your long standing employees a good idea? The negitive press is not what the company needs. How long will it be before you can buy Borders stock for one dollar a share?

  11. Pingback: Borders Books Employees Are Angry! | Used Books Blog

  12. As a former employee of Borders Call Center I can tell you there are several issues with the company. I was there almost 5 years and actually did the training of customer service. One of the issues are this company use to care more about it’s employees and now they are getting the short end of the deal in so many ways. Should this make you less friendly and helpful to your customers; certainly not! However, when you are taking calls for 8-10 hours a day and there is no appreciation for what you do and more and more is being taken away daily, the firing of supervisors, reps and management, then being told there is mandatory ot one week and then you only have 2 days scheduled the next week and you know the company is in trouble, it leaves one to wonder what is going on. Unfortunately, the company doesn’t want to “bog down” the employees and scare them, well, as an ex employee (my choice btw) I feel it’s very important that the employees are kept up to date so they may better enhance service making customers happier. Time will tell I suppose.

  13. Is your info correct? I am not trying to be a bad guy, but I don’t spot how this makes complete sense! I often have to check the same stupid things out for myself on my own News Blog site… but what you wrote is important, and I will place a link back to your post. You do not have to reciprocate, I just wanted to inform you as to what I was doing.Peace!

  14. HA!!!Border’s succeesfully pissed off all customers to the point they went accross the street to B&N to get service.The staff was beyond stressed out and over worked.Can you imagine being followed into the bathroom for help???They could have pulled themselves out of the muck over ther Holidays if they had gone back to thier roots and focused on service instead of paying execs to tell us how to sell.GUEST G (Greeet- no time) U (Understand-No one told me what is going onand I was management) E (Encourage-tell the ten people behind me that) S (Suggest-get right on that in my spare time) T ( Thank-happy they are not swearing at you)

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