Publishers gloomy on Borders' turnaround plan

Publishers gloomy on Borders' turnaround plan

US publishers have dismissed Borders' recovery plan, which includes revamped stores and increased online sales, as unrealistic and are increasingly gloomy about its future.

The New York Times reports Borders senior management held a lengthy creditors meeting yesterday (6th March) with publishers including Penguin, Random House, HarperCollins and Perseus.

The retailer said it could make a profit by the end of this year and anticipated 40% of its sales coming from online by 2015. It also outlined a tailored offer with individual stores stocking a range according to its customer base. It also plans to stock more tablet devices and increase the number of stores selling the Kobo e-book reading device. Its Ann Arbor headquarters will be moved to Detroit to try and slash costs.

Despite this, publishing sources told the newspaper they felt more than ever that Borders will be forced to sell itself or liquidate. They have also complained about plans to award executives $8.3m in bonuses, in a effort to retain senior staff. Some publishers have been trading cash on delivery with Borders and said yesterday's plans leave them no more likely to change trading terms.

Borders filed for Chapter 11 bankruptcy in February after years of poor sales and turnover of senior staff. In the third quarter of 2010, like for like sales were down more than 12% and it lost $74.4m. It since secured $505m in financing from lenders led by GE Capital in order to fund trading through the bankruptcy process. It has closed 226 superstores and plans to close an additional 20.