Distributor cautions on Borders US
10.11.08 | Catherine Neilan
US-based distributor Independent Publishers Group (IPG) has told The Bookseller that the majority of its publisher clients plan to continue supplying books to the US bookseller Borders, after IPG issued a "special alert" asking its clients to accept cover for "printing costs" only, in the event of a default by the retailer.
The move was prompted by Borders US' decision not to pay its invoices for two months. Instead, the troubled US bookseller was anticipating making "excessive returns”.
As a result IPG president Mark Suchomel, which distributes books for 300 trade publishers in the US, said he had told the firm's clients to either stop supplying Borders or accept the reduced cover. Suchomel said he was asking clients to "share the risk", indicating that another independent distributor recently took a similar position with its clients.
The revelation has increased concern over the financially beleaguered retailer, though it is known to have been trimming its inventory for some time. The Bookseller revealed last week that credit insurer Euler Hermes ACI had withdrawn its cover because of sustained "losses" amid the economic slowdown. Suchomel said the credit insurance problems had added to his reasons to act. "We have asked publishers to share a little bit in the credit risk, as there are still questions about the long-term health of Borders," he said.
Earlier this week, the Association of American Publishers estimated book sales during September decreased by 2%, with a 9.2% annual decline for hardbacks and an 8.6% drop in paperbacks being off-set by growth in children’s books.
“In general, we are coming up on a very tough holiday season – at that point you have to look and see how the major accounts are going to weather the storm. Borders’ financial health has been talked about a lot, so we tend to be somewhat conservative,” Suchomel added. He said IPG was “typically" owed about $2m by Borders US. The memo sent out to publishers said: “A default of that amount would by no means put [us] out of business, but it would be painful and weaken the short-term health of the company, and would mean we would have to defer some of our plans for future growth.”
However, Suchomel said 90% of responses received since the memo had been issued were positive, with its publishers wishing to continue trading with Borders. “For Borders it will be very little change,” he added.
A spokeswoman for Borders US declined to comment on the memo, which had not been seen by the company. However, she said: "We continue to pay our vendors and to receive product from them for our stores. We are pleased with the progress we are making in working with the publishers and improving our inventory productivity as it will make our business healthier for the long term future."
Comments on this article
By some things never change
wow, i haven't been on the bookseller for nearly a year but it's nice to see that ray hollingsworth is still around being a #@*$04 Aug 10 20:15
