bookseller analyst

Borders: CEO Jones Not Responsible for Sins of the Previous Management

Mr. Sullivan, with all due respect, the current management at Borders has no clue whatsoever in running a retail business. They have confused strategy and tactics, botched the e-commerce roll-out, mismanaged inventory and made terrible strategic decisions.

They paid down their debt by returning merchandise. Books, CDs and DVDs are basically bought on consignment from publishers and distributors. Smaller bookstores have done this for years: returned merchandise for credit to keep new merchandise rolling in. Borders mortgaged its future with draconian cuts in inventory. This ensured lower sales. At the same time Borders cut already low staff hours and cut positions from stores. This reduced customer service.

Borders has engaged in a discount war with Barnes and Noble and Borders will lose that war since B&N has the cash to survive.

Borders also brought out their new e-commerce site a day late and a dollar short. Instead of just rolling out a competent site it added a Magic Bookshelf that delayed the rollout and cost the company cash and sales.

Borders has mismanaged its inventory horribly and is now ill-positioned to have anything but have a dismal 4th quarter.

I do not believe the concept stores are ore profitable for one second. It is a nice design but it is contrary to everything else Borders can do: more capital, more staff, more inventory.
Granted George Jones had a tough task when he took over but he has stumbled every inch of the way since. He can blame a poor macro-economy but he put the company in a terrible position.

Bill Ackman may have trusted Jones' judgment when he bought a third of the company for $12+ a share. I guess if he thought Borders was such a great buy he could now buy the other two-thirds.

Mr. Sullivan, if you think Borders is so great, buy it. I have a 40% off coupon.