Borders to Sell Paperchase: A Good Short-Term Move

Looking for a price tag of about $80 million, borders (BGP) has put the UK Paperchase stationary retailer up for sale.

Paperchase has more than 100 stores and concessions, including ones in House of Fraser and Selfridges department stores in the UK. In 2005 it began opening concessions in US Borders stores.

Reports are that Goldman Sachs (GS) has been hired to conduct a review that ought to lead to a sale. I am not sure this is the best thing long term for Borders but, given the current retail environment, it is a necessary step to pay down some debt, restore more liquidity and let's be honest, make it more attractive to a buyer.


Disclosure: Long BGP

Comments

[dingojoe:]

I guess Borders needs the money to finish their new website. George Jones had said on the March 20th Earnings Call that it'd be rolled out by May 3rd, but it's still a no go. In fact, the company website hasn't worked at least since Friday (try going to bordersstores.com and getting investor information). Things seem to be dragging with the construction of their new concept store here in New Orleans too. October seems pretty unlikely. Granted these are little things, but they do add up.

I'm personally rooting for Blockbuster-Circuit City to buy Borders. Just think of the synergies!

2008 May 18 10:37 AM

[dingojoe:]

A Message From George Jones
Wed May 14 2008

"We are moving forward rapidly on our path to significantly reduce expenses. As you know, we've been working with an outside consulting firm to help us in this process and have an internal team that is focused on getting our expenses where they need to be to operate in this challenging economic environment, as well as properly position our company for the longer term.

To address payroll expenses, we have already put on hold or decided not to fill many open positions, such as the Chief Marketing Officer post. Today, I am announcing a next step that is a difficult, but necessary one. We have made the decision to eliminate several positions at the director and vice president level. The individuals impacted by this decision have been informed over the past few days and we are working with each of them on transition plans. They include: Susan Zewicke, VP, Seasonal Business, Airport, and Corporate Sales; Myles Romero, VP, Strategic Marketing and Entertainment Alliances; Julie Janusz, VP, Strategic Planning and Organizational Development; Beryl Needham, VP, Merchandising (Proprietary, Fiction, Diversity, and Bargain); Gordon Eiland, VP, Paperchase Strategy and Business Development; Susan Mann, Director, Benefits; Tom Dwyer, Director, Fiction and Proprietary; and Carey Wallace, Director, Internal Audit.

I'm sure you can understand that the decision to eliminate these positions was extremely tough, as these individuals have made significant contributions to our organization. I want to thank each of them for their hard work and dedication and wish them well going forward."

Ruthless turnaround or death-spiral? Always hard to tell.

2008 May 18 10:27 PM

[Fence&Deck:]

As a long term Borders employee, this is a very common pattern: we promote the heck out of it for a year, then wake up and dump it. At the moment we have Paperchase items on display in every section of the store--Mysteries, Science, Kids, Travel, etc. A regular customer told me: "If I wanted to go to a cheap gift shop, I'd go to one with a better selection!"
And of course, when we mark them down it makes the Bargain area look like the Salvation Army....

2008 May 19 12:43 PM

[User 174536:]

The FT article stated a price of 80 million POUNDS, not dollars. Makes quite a difference...

2008 May 22 07:34 PM