Will Borders survive reorganization?

There is a Borders about five minutes from my house and it’s one of three stores being shuttered here in the Milwaukee area. Based on my own shopping patterns (especially since I bought a Kindle about 18 months ago), it’s hard to see how the traditional brick & mortar bookseller will survive without this sort of consolidation.

The big winners short-term are Barnes & Noble (in this trading area, about four miles away) and a local independent bookseller (about three miles away in the other direction). But the lesson learned is that the demand for printed books is simply too tenuous to support three competitors in a 10-mile radius, even with a high density of affluent, educated readers. What looks like a short-term benefit to B&N should really be interpreted as the writing on the wall.

As to Mr. Ackman’s declaration (within the last 2 weeks) that Borders would not have to declare Ch. 11 bankruptcy…right now his track record investing in retail looks pretty similar to Eddie Lampert’s. If I were on the board and management team at JCP, I would take whatever he says with a grain of salt.


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