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ACCOUNTING FOR DECISION MAKING

PROJECT

Submission Date: December 15, 2011 v

Group 1 Anthony Hemanth Neha Sandya Vidya Group 1(Evening) Anthony, Hemanth, Neha, Sandya, Vidya

References Group 1(Evening) Anthony. Sandya. Hemanth. Vidya .Page |2 Table of Contents About the company Key Information Overview Major Products and services History Company statements Key competitors Major developments affecting the company Recent happenings in the company Industry analysis Financial Statement Analysis Key Performance Indicators Strengths and Weaknesses Any other area/information. Neha.

and therefore began liquidating its remaining 399 retail outlets on July 22. was an international book and music retailer based in Ann Arbor. Sandya.500 throughout the U. 2011. effectively shutting down Borders. However. Borders Group formerly operated stores in Australia. and three in Puerto Rico. Hemanth. Despite an offer from the private-equity firm Najafi Companies.The Chapter 11 case was ultimately converted to Chapter 7. Borders was not able to find a buyer before its July 17 bidding deadline. Inc. 2010. and then were later sold again to Red Group Retail. Borders Express. the company operated 511 Borders superstores in the world. with the last group to close by July 17. including Waldenbooks.S. New Zealand and Singapore. Borders airport stores.com website has been replaced by a redirect to the Barnes & Noble website.Major Products and Services Borders Group was under the following segments: Borders Superstores Group 1(Evening) Anthony.S. primarily in its Borders and Waldenbooks stores. Vidya . Borders applied for Chapter 11 bankruptcy protection and began liquidating 226 of its stores in the United States. The company employed approximately 19. the Borders. Neha. September 18. including 508 in the U. On February 16. with the five New Zealand stores sold to the James Pascoe Group. As of January 30. and Borders Outlet stores. Michigan. The stores continued to operate under the Borders brand under the unaffiliated Borders Asia Pacific brand until Red Group was placed into voluntary administration in February 2011. with the last remaining stores closing their doors on Sunday. The company also operated 175 stores in the Waldenbooks Specialty Retail segment.Page |3 ABOUT THE COMPANY Borders Group.Key Information Borders Group – Overview Borders Group . 2011. As of October 14. Borders Group . these were sold off to Pacific Equity Partners (which owned rival Angus & Robertson) in 2008.com entirely. 2011.. and the Australian stores gradually shut down.

As of January 30.K. superior customer service and an inviting and comfortable environment designed to encourage browsing. and ensuring consistency of execution across the chain. improving assortment planning. Waldenbooks Specialty Retail Stores Waldenbooks Specialty Retail operates small format stores in malls. Book Inventory Systems (BIS) (1976–1994). Group 1(Evening) Anthony. airports and outlet malls. wellness. business.0 million and average sales per square foot were $282 for 2009.Borders superstores offer customers a vast assortment of books. Vidya . music and movie format. Paperchase is a brand leader in design-led and innovative stationery retailing in the United Kingdom. music and movies. including 51 stand-alone stores. music and movie superstores in the United States. offering customers a convenient source for new releases. periodicals and a standard selection of other titles. can only be found in Paperchase stores. The vast majority of Paperchase’s merchandise is developed specifically by and for Paperchase and. Sandya. 27 concessions in the stores of other retailers. as well as Borders-branded airport stores and our mall-based seasonal businesses. the majority of Borders superstores were in a book. International Stores Our International stores include three Borders superstores in Puerto Rico and our Paperchase U. These categories include children’s. Additionally. educational materials. which includes both in-store and online e-commerce components. A sister company. and seven stores located in railway stations. we operated 85 Paperchase locations. Hemanth. gifts and stationery. we have made significant reductions in corporate and other selling. 2010. Seattle’s Best Coffee cafes and Paperchase gifts & stationery shops. Borders Group – History The original Borders bookstore was located in Ann Arbor. which continue to be drivers of both sales and increased profitability for their categories. general and administrative costs over the last twelve months. We are focused on improving key retailing practices at our superstores. which we believe will help to distinguish our domestic superstores from competitors. as such. The Borders brothers' inventory system tailored each store's offerings to its community. cooking. was founded to serve as a wholesaler for and provide the brothers' custom inventory system to regional independent bookstores such as John Rollins. Neha. Average sales per store were $1. A key element of this strategy is the enhancement of certain key categories. launched in May 2008.Page |4 Borders is a premier operator of book. hardcover and paperback bestsellers. As of January 30. replenishment and supply chain effectiveness. Michigan. Borders Express and Borders Outlet names. Internet Our business strategy includes the operation of a proprietary e-commerce platform. Waldenbooks Specialty Retail operates stores under the Waldenbooks. 2010. where it was founded in 1971 by brothers Tom and Louis Borders during their undergraduate and graduate years at the University of Michigan. This includes increasing effectiveness of merchandise presentation.

was located in two rooms above 209 State Street. it was still identified as "Borders “ Borders Group – Company Statements Group 1(Evening) Anthony. From there the brothers soon moved. Former Hickory Farms president Robert F. The chain's flagship store was in downtown Ann Arbor. on the southwest corner of William and Maynard Streets. Hemanth. Vidya . but the brothers did not deal in textbooks. north of the State Theater. Wahr's had been mainly a textbook and school supplies vendor. with a meager stock of used books. an 80-year-old bookstore that was ending business at 316 South State. Michigan at the corner of Liberty and Maynard Streets. In 1975 they bought out the stock of Wahr's. The first Borders bookshop. DiRomualdo was hired in 1989 to expand the company. They moved the retail bookshop to much larger quarters that had become available across State Street.Page |5 Thackeray's. Although not the original location. Schuler Books. Hildebrand had managed Gibson's used and rare book department in East Lansing for years and Harvey Robin had been a local restorer of rare books. in the former location of the Wagner & Son men's clothing store. and hired Michael Hildebrand and Harvey James Robin to stock it with rare books and manage the old shop. in the building once occupied by the now defunct Jacobson's Department Store. briefly. who moved his bindery upstairs. The old shop was renamed Charing Cross Bookshop and Tom Frick was sent over from the new bookshop to help. and Joseph-Beth Booksellers. to a tiny ground floor + mezzanine operation in the Maynard House apartment building. Sandya. Neha.

Sandya.Page |6 Group 1(Evening) Anthony. Hemanth. Neha. Vidya .

Vidya . Hemanth. Sandya.Page |7 Borders Group – Key competitors Group 1(Evening) Anthony. Neha.

including increased competition from Internet retailers and a greater concentration on the sale of books and music by mass merchants and other non-bookstore retailers. with Borders facing competition from the Internet and other superstore operators. with respect to music and movies. drug stores. with sales generally highest in the fourth quarter. mass merchandisers and other non-bookstore retailers. The Internet is a significant channel for retailing in all media categories that we carry. Our results of operations depend significantly upon the holiday selling season in the fourth quarter and less than satisfactory net sales for such period could have a material adverse effect on our financial condition or results of operations for the year and may not be sufficient to cover any losses which may be incurred in the first three quarters of the year. reductions in disposable income as a result of financial market declines and declines in residential real estate values. Borders Group – Major developments affecting the company Our financial condition and results of operations are dependent upon discretionary spending by consumers. including the downloading of books. The increasing popularity of eBooks has the potential to significantly impact our sales of physical books. Hemanth. credit availability and consumer confidence.6% of our sales and 36. The largest mail order clubs are affiliated with major manufacturers of prerecorded music and may have advantageous marketing relationships with their affiliates. warehouse clubs and mass merchandisers. mail order clubs. Competition within the retail book industry is fragmented. In addition. which may be affected by general economic conditions. The retail book business is highly competitive. as well as specialty retail stores. Sandya. the downloading of titles has significantly impacted our sale of CDs and DVDs. In the future. Worldwide economic conditions and consumer spending have deteriorated significantly and may remain depressed for some time. independent single store operators. warehouse clubs. Neha. Our business is highly seasonal.8% of our gross margin dollars were generated in the fourth quarter. we face competition from companies engaged in the business of selling books. has either declined or not experienced significant growth in recent years. music and movie content. We believe that the losses are attributable to a number of factors. established movie chains. the retailing of books. discount stores. In addition. 33. the overall consumer demand for products that we sell. music and movies over the Internet is highly competitive. Vidya . particularly music and movies. Also. Borders and Waldenbooks compete with other specialty retail stores that offer books in a particular area of specialty. In particular. Other factors Group 1(Evening) Anthony. In 2009. In addition. Some of the factors that are having an impact on discretionary consumer spending include increased unemployment. movie rental stores. Borders and Waldenbooks may face additional competition from other categories of Internet and brick and mortar retailers entering the retail book market. discount stores. In addition. music and movies via electronic means.Page |8 We have experienced operating losses over the last two years and such losses may continue. consumers receive television and mail order offers and have access to mail order clubs. The music and movie businesses are also highly competitive and Borders faces competition from large established music chains.

with respect to our mall business. 2011.[42] however. The federal bankruptcy court approved this sale on September 26. 2011.[59] However. overall mall traffic. that would acquire the assets for $215 million and the assumption of $220 million in debt. Because of the seasonal nature of our business. Neha." Borders Group – Industry analysis Top 5 Companies Company Sales Location Group 1(Evening) Anthony. the bid deadline expired on July 17 without a bidder. listing $1.[48] Former rival and the current second-largest chain of bookstores in the United States. our operations typically use cash during the first three quarters of the year and generate cash from operations in the fourth quarter. The Borders online store closed on September 27. that it had found a bidder. the company announced that it had filed for Chapter 11 bankruptcy protection. The last remaining Singaporean Borders store in Parkway Parade Shopping Center. Malaysia and New Zealand. purchasing the leases for 14 stores in primarily New England and Pennsylvania. 2011 Borders started closing its remaining 399 stores with a phased roll-out.[33] The company also announced the liquidation and closing of 226 stores. Sandya. Hemanth. Office equipment 'For Sale' sign at Borders corporate headquarters Books-A-Million later resurrected its offer to buy portions of Borders Group.[46][47] Business operations ceased in September 2011.Page |9 that could affect the holiday selling season include general economic and geopolitical conditions. closed its doors at 9pm (Singapore Time) after a final sale on Monday. there are still international Borders stores operating in The United Arab Emirates.[43] A United States bankruptcy judge approved a petition to liquidate. Direct Brands.[44][45] On July 22. 2011 at 10:30 pm Eastern/9:30 pm Central. expressed interest in purchasing half of the remaining Borders Group stores. Vidya . overall consumer spending patterns. Borders cardholders were informed by email: "As part of Borders ceasing operations. were unable to come to an agreement suitable to all parties. All Borders customers have until October 29th to prevent their personal contact and purchase information from being transferred to Barnes & Noble.[35][36] Borders Group announced on July 1. weather conditions and. the day liquidation was approved by the courts. The Gores Group and Najafi Companies. and were unaffected by their store closures. A banner now appears on their website allowing users to browse but directing them to Barnes & Noble to complete their purchases. however. These Borders stores are now under different ownership from the original Borders Group. 2011. 2011.[37][38][39][40] A group of Borders creditors rejected the Direct Brands takeover bid in July 2011.[60] On October 1. The two sides. we [Barnes & Noble] acquired some of its assets including Borders brand trademarks and their customer list. Oman. 2011.[34] Two private-equity firms. Borders Group –Recent happenings in the company On February 16.293 billion in debts in its filing.[41] Borders filed for an auction and the motion was approved by a judge. September 26. Books-A-Million. September 18. had made a bid to acquire 30-35 stores and their assets on July 19.[56][57][58] Borders USA closed the doors of its final remaining stores on Sunday.275 billion in assets and $1. 2011.

3.719. Borders -. The industry includes companies that operate physical retail locations. Online booksellers.00M River Grove. Group 1(Evening) Anthony. The industry is highly concentrated: the 50 largest companies account for about 85 percent of sales. INC.recently declared bankruptcy and Amazon says it is now selling more e-books than printed ones. The US bookstores industry includes about 10. Vidya . 1.331. Major companies include Barnes & Noble and Books-A-Million. Books and bookstores. Neha.28M Borders Group.274. large discount booksellers drove many small. IL WH SMITH TRAVEL HOLDINGS LTD 2.90M Ann Arbor.000 stores with combined annual revenue of about $16 billion.000 stores with combined annual revenue of about $16 billion.30M New York. those superstores are taking a hit from on-line and digital book sellers. Inc. The industry is highly concentrated: the 50 largest companies account for about 85 percent of sales. 2.899.P a g e | 10 BARNES & NOBLE BOOKSELLERS. have been having a hard time in the United States in the last few years.81M Meguro-Ku.411. Sandya. MI KINOKUNIYA COMPANY LTD. Major companies include Barnes & Noble and Books-A-Million. Now.com. Hemanth. Not long ago.the country’s number two book chain -. independent book stores out of business. Tokyo he US bookstores industry includes about 10. such as Amazon. are covered in the industry profile for Internet and Catalog Retailers. NY Follett Corporation 2.

000. Sandya. The industry is laborintensive: average annual sales per employee are about $130. Large companies can provide broader selections and lower prices. The industry is being redefined as booksellers fend off intense competition from discount stores and online retailers and adjust to increasing acceptance by consumers of digital books as an alternative to printed books. PRODUCTS. Sales per employee tend to be lower for smaller. filed for bankruptcy in early 2011 before moving to liquidate its assets. Vidya . Hemanth. once the nation's #2 chain. Bookstores are finding the times challenging and Borders. Small companies can compete by offering specialized products or serving a local market. Neha.P a g e | 11 COMPETITIVE LANDSCAPE Demand is driven by demographics and consumer income. OPERATIONS & TECHNOLOGY Group 1(Evening) Anthony. independent bookstores. The profitability of individual companies depends on merchandising and marketing.

the revenue trends. college bookstores. and specialty bookstores. Hemanth. children’s).1% 10% + 21% -16% -15% -9% +15% +11% +16% +29% +17% +18% +14% +21% +24% -2% +9% -1% +5% -2% +4% + 4% Borders Group – Financial Statement Analysis Financial ratio -. Sales growth (or loss) over previous seven years Company . Vidya . and specialty bookstores.com 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 -5% -3% +2% +2% +2% +8% +7% + 4% + 3% -0% -1% +2% +2% +4% + 1% + 3% + . Sandya. mostly religious books. Profitability Ratio ROE ROA EPS Group 1(Evening) Anthony. nonfiction.P a g e | 12 The industry is segmented into general. and religious . Trade books account for about 35 percent of sales. Neha. college. adult.%'s all rounded Barnes&Noble Bookstores Borders / Waldenbooks Amazon Media (books. DVDs) North America BN.. General bookstores sell mostly trade books (fiction. textbooks for nearly 30 percent. music.. mostly textbooks.

fonerbooks.m.com/investing/stock/bgpiq/financials/balance-sheet Dec 12.marketwatch. Hemanth. financial position Borders Group – Key Performance Indicators Borders Group – Strengths and weaknesses Any other area/information References http://www. Vidya .P a g e | 13 Liquidity CR QR Efficiency ITR RTR CTR Growth Margin leverage. 2011 8:10 p. Group 1(Evening) Anthony.marketwatch. Neha.com/booksale.htm http://www. Sandya.com/investing/stock/bgpiq/financials (financial data taken) http://www.

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