Borders (retailer)

Borders Group, Inc.
Company type	Public
Industry	Retail (Books and Stationery)
Founded	1971 in Ann Arbor, Michigan, United States
Founder	Tom Borders, Louis Borders
Defunct	2011
Fate	Bankruptcy and liquidation; trademarks acquired by Barnes & Noble
Headquarters	Ann Arbor, United States
Area served	United States, United Kingdom, Ireland, Singapore, Australia, New Zealand, Malaysia, Middle East
Key people	Philip Pfeffer (CEO 1998), Ron Marshall (CEO 2009), Bennett S. LeBow (CEO 2010)
Products	Books, stationery, toys (in some regions)
Number of employees	~19,500 (at closure in 2011)

Borders is a global retailer specializing in books and stationery, established in 1971 in Ann Arbor, Michigan, by siblings Tom and Louis Borders.

In 1992, Kmart acquired Borders, and in 1995, it was spun off as an independent entity named Borders Group, Inc. with its headquarters continuing to be based in Ann Arbor. The company also operated the subsidiary chain Waldenbooks. Beginning in 1997, Borders pursued international growth, entering various markets such as Singapore, Australia, New Zealand, the United Kingdom, Ireland, Malaysia, and the Middle East through collaborations including one with Al Maya Group.

During 2007 and 2008, Borders divested several regional operations: Risk Capital Partners took over stores in the UK and Ireland, while REDgroup Retail assumed control of locations in Singapore, Australia, and New Zealand under licensing agreements. Financial struggles subsequently caused closures: the UK and Ireland branches went into administration in 2009; stores in Singapore, Australia, and New Zealand shut down in 2011 following franchisor insolvency; and U.S. operations were liquidated mid-2011, resulting in nearly 19,500 layoffs.

In September 2011, competitor Barnes & Noble acquired Borders' trademarks and intellectual property rights. Borders franchises in Malaysia and the Middle East continued operating under renewed licensing agreements with Barnes & Noble until 2015 when Al Maya Group purchased the regional trademark rights outright and expanded the product range to include toys and stationery. Ultimately, the Malaysian franchises ceased operations in August 2023.

This sequence of events underscores the difficulties Borders faced maintaining its international presence amid evolving market conditions and intense competition within the book retail sector.

History

Borders was launched in 1971 at 209 South State Street, Ann Arbor, Michigan, by brothers Tom and Louis Borders while attending the University of Michigan. In 1975, they purchased Wahr's bookstore—an establishment with an 80-year history located at 316 South State Street—shifting their focus away from textbooks toward rare books and relocating to a larger venue at 303 South State. The original store was renamed Charing Cross Bookshop.

The company opened a second outlet in 1985 situated in Beverly Hills, Michigan. In 1994, the flagship relocated to 612 East Liberty Street in Ann Arbor, occupying a building formerly used by Jacobson's Department Store.

To accelerate expansion efforts, Robert F. DiRomualdo—previously president of Hickory Farms—was hired in 1989 to lead growth initiatives.

Kmart and Waldenbooks

In 1992, Kmart purchased Borders; Kmart also owned Waldenbooks, a mall-based bookstore chain. Kmart intended to apply Borders' management expertise to improve Waldenbooks’ performance but encountered difficulties as many Borders executives left. Facing competition from rivals like Barnes & Noble and Crown Books, Kmart spun off Borders in 1995 via a stock distribution plan. Initially operating under the name Borders-Walden Group, the company reverted to Borders Group before the end of that year.

Borders briefly explored mall-based toy and novelty retailing through All Wound Up starting in 1994, primarily operating seasonal kiosks.

Plans for expansion into Canada via a large store in Toronto were abandoned due to restrictions on foreign ownership.

Among Borders’ top-performing U.S. stores was one located in Puerto Rico that generated $17 million annually. Another notable location was at 5 World Trade Center in New York City; this store closed following damage sustained during the September 11 attacks.[[Image:2008-11-10 Borders in Chapel Hill.jpg|thumb|right|A Borders store in Chapel Hill, North Carolina]

Modifications in corporate strategy

In 1998, Philip Pfeffer took over as CEO from Robert DiRomualdo, guiding Borders through major strategic transformations.

By 2003, the company managed 1,249 outlets under the Borders and Waldenbooks banners. In 2004, Borders collaborated with Seattle's Best Coffee, a Starbucks subsidiary, to establish cafes within its superstore locations, aiming to enrich the customer experience and broaden its product range.

March 2007 saw Borders announce a plan to halve the number of Waldenbooks stores as part of an effort to streamline its operations. That same year, select stores were equipped with digital video screens powered by Ripple Networks to deliver targeted advertising content, intending to boost customer engagement on-site.

In 2008, Borders introduced 14 Digital Center concept stores across the country, offering electronic devices such as MP3 players and the Sony Reader. These outlets appeared in cities including Ann Arbor, Denver, Las Vegas, and Alameda, marking a shift toward digital retail offerings.

To compete with Barnes & Noble’s paid discount system, Borders launched the free Borders Rewards program, which provided members with coupons and store credit incentives. By August 2007, membership exceeded 20 million, reflecting strong customer loyalty initiatives.

Following market trends, Borders removed charges for Wi-Fi access in September 2009 to improve in-store experiences and maintain competitiveness.

Profit decline

Borders last recorded an annual profit in 2006; revenue decreased by $1 billion during the subsequent four years.

In March 2007, the company ended its six-year marketing partnership with Amazon and announced plans to develop its own e-commerce platform slated for early 2008 launch.

By March 2008, amid financial strain, Borders revealed intentions to sell the chain. To support operations through that fiscal year, it secured a $42.5 million loan from Pershing Square Capital Management—its largest shareholder—at a steep 12.5% interest rate. Following this announcement, stock prices plunged 28.6% to $5.07 per share and continued falling to $1.30 by December 2009.

On January 5, 2009, Ron Marshall replaced George L. Jones as CEO; Jones received a severance package worth $2.09 million. Mark Bierley assumed the CFO role amid an 11.7% decline in holiday sales to $868.8 million. Mick McGuire, formerly a Pershing Square partner, was appointed chairman on January 13.

Marshall renegotiated the Pershing Square loan in March 2009 for an additional year at a reduced interest rate of 9.8%. Cost reductions and new agreements with publishers helped shares climb above $1 within days and approach $2 by April, prompting cancellation of a proposed reverse stock split.

In August 2009, Borders revamped its board by replacing five of eight members with executives such as Paul J. Brown (Hilton Hotels), Timothy V. Wolf (MillerCoors), and Dan Rose (Facebook).

November 2009 brought announcements of roughly 200 Waldenbooks closures aimed at improving Specialty Retail profitability; by January 2010, 182 locations had shuttered.

Holiday sales dropped by 14.7% in 2009 to $846.8 million alongside significant reductions in payroll hours.

At the beginning of 2010, Borders operated 511 U.S.-based superstores along with 175 Specialty Retail outlets including Waldenbooks and Borders Express sites.

Ron Marshall resigned as CEO on January 26, 2010, to join The Great Atlantic & Pacific Tea Co., triggering shares to fall below $1. All senior executives exited during his leadership period. Mike Edwards was appointed interim CEO.

Borders repaid the Pershing Square loan on March 31, 2010; stock prices rebounded to $2.45 per share by early April.

On May 21, 2010, Vector Group chairman Bennett S. LeBow made a major private stock investment in Borders and joined the board alongside CEO Howard Lorber. Following Mick McGuire’s resignation as chairman, LeBow took over that position and was named CEO on June 3; concurrently Mike Edwards became president and CEO of Borders Inc., the company’s principal subsidiary.

The company reported significant third-quarter losses compared to the previous year and by year-end postponed payments to publishers to conserve cash amid difficulties refinancing its credit facilities.

Bankruptcy and liquidation

On February 16, 2011, Borders Group initiated proceedings under Chapter 11 bankruptcy, reporting assets valued at $1.275 billion against liabilities totaling $1.293 billion. The company disclosed plans to liquidate and shut down 226 locations. Interest in purchasing approximately half of the remaining stores was expressed by private equity firms The Gores Group and Najafi Companies.

Although Najafi Companies submitted a proposal, Borders was unable to find a buyer that satisfied creditor demands by the July deadline, prompting the company to commence liquidation of its remaining 399 outlets. The final stores ceased operations in September. Competitor Barnes & Noble acquired Borders’s trademarks along with its customer database.

On July 1, 2011, Borders revealed that Direct Brands intended to purchase assets for $215 million while assuming $220 million in debt. However, this offer was rejected by a coalition of creditors, resulting in approval for an auction that concluded without any bids by the July 17 cutoff date. Subsequently, a U.S. bankruptcy judge authorized conversion of the case to Chapter 7 liquidation. Borders initiated gradual store closures starting July 22 and fully terminated operations by September 2011.

Books-A-Million sought to acquire between 30 and 35 stores but negotiations did not succeed. Eventually, they secured leases for 21 locations primarily situated in New England and Pennsylvania. Borders USA officially closed all remaining stores on September 18, 2011.

The Borders online retail platform shut down on September 27, 2011, with customers redirected to Barnes & Noble’s website for purchases and given until October 29 to decline data transfer. On October 1, cardholders were informed that Barnes & Noble had obtained certain assets including trademarks and customer information. This transaction received approval from the federal bankruptcy court on September 26, 2011.

Malaysia (defunct)

Borders Group entered the Malaysian market in April 2005 through a franchise partnership with Berjaya Books Sdn. Bhd., opening its inaugural store at Berjaya Times Square in Kuala Lumpur. Initially promoted as the largest Borders store worldwide at , it later reduced its footprint by one floor. Additional outlets launched in The Curve, Mutiara Damansara, and Queensbay Mall in Penang (December 2006), with the latter closing in December 2019. Speculation exists regarding a possible new store at Sunway Pyramid mall.

Middle East (present)

Borders expanded its presence in the Middle East beginning with a franchise location at Dubai’s Mall of the Emirates in October 2006, followed by stores in Oman and Sharjah. Despite domestic challenges faced by the parent company, franchise growth continued within this region. By late 2009, all directly owned international stores had been sold or shuttered, leaving only franchised outlets operating in Dubai and Oman.

Currently, Borders stores across the Middle East—including countries such as UAE, Oman, Qatar, and Kuwait—are independently owned and were not impacted by the original company’s shutdowns. In 2015, Dubai-based Al Maya Group secured perpetual rights to use the Borders brand throughout the Middle East and broadened their inventory to include books alongside toys and stationery products.

Singapore, Australia, and New Zealand (no longer operating)

Borders inaugurated its first overseas location in Singapore in 1997, situated at Wheelock Place on Orchard Road. By 2006, this particular store ranked as the highest-grossing outlet worldwide in terms of revenue per square meter.

To alleviate financial burdens, Borders divested its stores in Australia, New Zealand, and Singapore to Pacific Equity Partners, the proprietor of rival chain Angus & Robertson, in 2008. This transaction resulted in the creation of REDgroup Retail. Following the sale, Borders’ divisions in the United States, United Kingdom, and Asia-Pacific became independently managed entities.

In 2012, Pearson Australia Group transitioned the Borders website to Bookworld; CEO James Webber attributed this change to a decline in the brand’s market value. Subsequently, Bookworld was rebranded under the Angus & Robertson name.

Borders Asia Pacific operated autonomously until REDgroup entered voluntary administration in February 2011. After this event, gift vouchers were initially restricted and later rendered invalid. The five stores located in New Zealand were purchased by the James Pascoe Group, while Australian outlets were gradually shut down by July 2011.

As a consequence of the administration process, 25 franchised Angus & Robertson stores disassociated from REDgroup and adopted independent branding. By May 2011, most REDgroup-owned bookstores across New Zealand had been sold to LS Travel Retail Pacific and James Pascoe Group.

The flagship Singapore location ceased operations suddenly on August 16, 2011; voucher acceptance ended shortly thereafter. Remaining stock was liquidated during a sale held at Singapore Expo from September 2 to 6. The final Singapore store closed on September 26, 2011, concluding fourteen years of business with discounts reaching up to 70% and fixtures sold off during closing hours.

Stores

At its peak, Borders maintained a network of 33 stores throughout Australia, New Zealand, and Singapore. All outlets shuttered following the collapse of parent company REDgroup Retail. The last remaining store in Singapore, located at Parkway Parade Shopping Center, closed on September 26, 2011.

In late 2012, Popular Holdings acquired the Borders brand rights in Singapore and opened a trial store at Westgate in 2013. This location was soon converted into a standard Popular bookstore.

United Kingdom and Ireland (no longer operating)

Borders entered the UK market by purchasing 35 Books etc. stores from Philip and Richard Joseph. Established as Borders (UK) Ltd. in 1998, it quickly rose to prominence among booksellers but encountered intense competition. Several Books etc. branches were closed before Borders (UK) Ltd. was sold to private equity investors in 2007. Between 2005 and 2008, the chain received multiple accolades including Bookselling Chain of the Year and Hachette Children's Retailer of the Year.

In March 2007, Borders Group divested its UK and Ireland operations to concentrate on its core US business but retained ownership of the Paperchase stationery brand. From that point onward, international expansion emphasized franchising models.

Typical UK locations included concessions such as Paperchase stationery sections and Starbucks cafés; some stores also featured RED5 gadgets and GAME video game areas.

In September 2007, private equity firm Risk Capital Partners, led by Luke Johnson, acquired Borders (UK) Ltd. for £20 million via subsidiary Bookshop Acquisitions Ltd., obtaining rights to both Borders and Books etc. brands. Borders Group maintained approximately a 17% stake. Despite this investment, Borders UK entered administration on November 26, 2009.

David Roche stepped down as CEO in January 2008 and was succeeded by Philip Downer, who launched a comprehensive category review without implementing immediate restructuring measures.

In March 2008, Borders (UK) announced it would close its Cornwall distribution center effective August 29, opting instead for direct deliveries from publishers and wholesalers—a strategy differing from competitor Waterstones’ plan to establish its own distribution hub.

To recapture online market share, Borders launched an e-commerce platform in July 2008. The following month saw the sale of eight London Books Etc. locations to Waterstones for an undisclosed amount.

Five stores located on Oxford Street, Llantrisant, Blanchardstown, Swindon, and London Colney closed in July 2009; these were replaced by New Look retail outlets. Ownership transferred to Valco Capital Partners (a branch of Hilco Capital), specializing in turnaround investments for distressed retailers.

By September 2009, most remaining Books Etc. outlets along with two Borders Express shops were listed for sale with closing-down sales commencing shortly thereafter.

Administration

In November 2009, confronted with cash flow difficulties, the company began searching for a purchaser. Borders' website stopped selling books, although CDs and DVDs continued to be available through The Hut Group. On 26 November, Borders (UK) entered administration after failing to raise enough funds to support the crucial Christmas trading season. Initially, BDO was intended to be appointed as administrators, but due to a conflict of interest, MCR took over this role and enlisted Hilco for guidance on liquidation. The approach involved simultaneously looking for a buyer and conducting clearance sales.

The clearance sale commenced on 28 November, featuring inventory from Denby China, which had been previously acquired by Valco Capital Partners. Hachette Livre successfully contested MCR’s unauthorized sale of its titles, leading to a High Court decision against MCR in December 2009.

While MCR pursued potential buyers, it declined a major offer from Richard Joseph, co-founder of Books Etc. Unable to sell the business as an ongoing operation, MCR declared on 22 December 2009 that all 45 stores would close permanently, with all employees laid off by Christmas Eve.

In January 2010, Capital Books Ltd purchased the BOOKS etc. brand, website, and Borders customer database. As of May 2022, Books Etc. functions as an independently owned family-run online enterprise. Borders (UK) Limited was officially dissolved in August 2011.

eBook store

On 7 July 2010, Borders introduced an eBook store offering direct downloads to e-reader devices or through the Borders eReader app compatible with desktop computers, iPhone, iPad, BlackBerry, and Android platforms. Although the service bore the Borders name, it was operated by Kobo, Inc.

By 3 June 2011, Borders eReader applications were rebranded as Kobo eReader apps, enabling customers to transfer their Borders eBooks into their Kobo accounts. This transition reflected strategic adjustments amid the company’s financial difficulties.

External links

Official Website (Archive)