Borders books files Chapter 11

Henny Ray Abrams. File/AP Photo
Borders' problems mean that publishers will have to cut their 2011 revenue estimates immediately by 1 to 10 percent, said Simba Information senior trade analyst Michael Norris.

NEW YORK --- Borders was slow to get the message: The big-box retailer lost book, music and video sales to the Internet and other competition. The result is that it filed for Chapter 11 bankruptcy Wednesday and will close nearly a third of its stores.

Less nimble than rival Barnes & Noble, Borders begins what analysts expect will be a quickly resolved struggle for the survival of its remaining stores. It's the latest cautionary tale about the dangers retailers face when they fail to keep up with swiftly changing technology and consumer habits.

"It's almost a case of hit-and-run," said Al Greco, a marketing professor at Fordham University. "They were crossing the street and they didn't pay attention, and that tractor-trailer (of technology) hit them."

Borders plans to close about 200 of its 642 stores over the next few weeks, from San Francisco to Fort Lauderdale, Fla., costing about 6,000 of its 19,500 employees their jobs. The closings are also a blow to publishers already owed tens of millions of dollars by the company, which stopped paying them in December.

Augusta's store in Augusta Exchange shopping center was not on the list of stores that will shut their doors. Five stores in Georgia -- in Atlanta, Austell, Buford, Kennesaw and Suwanee -- are set to close.

Borders said it is losing about $2 million a day at the superstores it plans to close.

Fifteen years ago, Borders superstores dotted the U.S. and seemed to be the future of bookselling. Its sprawling stores, comfortable chairs, cafe and widespread discounts epitomized the "bigger is better" retail philosophy that shut down many mom-and-pop bookstores.

Americans today are more likely to pick up the latest best-seller anywhere from Costco to Amazon.com, or download a digital version, than make an extra trip to a strip mall.

Analysts say a key error for Borders came in 2001, when it contracted out its e-commerce business to Amazon.

"Amazon had no incentive whatsoever to promote Borders," said Simba Information senior trade analyst Michael Norris. "It really marked the beginning of the end."

Borders also was slow to catch on to e-books. Amazon launched its Kindle e-book reader in 2007; Barnes & Noble followed with the Nook in 2009. Borders entered the electronic book market with Canada's Kobo Inc. last year.

Borders also didn't react quickly enough to declining music and DVD sales, and it hired four CEOs without book-selling experience in five years.

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