Who gains, loses from Borders bankruptcy
Borders Group Inc. filed for Chapter 11 bankruptcy protection on Wednesday. Here's a look at who stands to gain and lose as it tries to reorganize to survive.
="briefhead">Winners
Barnes Noble: The nation's largest traditional bookstore chain stands to gain $550 million in revenue from added business where Borders is closing stores, according to Credit Suisse analyst Gary Balter. He estimates the announced closings could help Barnes Noble superstores sales by 6 percent. If Borders goes out of business entirely, that would add 26 percent.
Amazon.com: Former Borders shoppers who don't head to Barnes Noble will likely head to Amazon.com, says Forrester Research analyst Sucharita Mulpuru. "Take what was Borders business, cut it in half and then divvy up the rest among Barnes and Noble, Amazon and the independents," she said.
Books-A-Million: The third-largest U.S. bookstore chain, based in Birmingham, Ala., and concentrated in the South, also stands to gain.
="briefhead">Mixed bag
Independent booksellers: While Borders and other book superstores put countless mom-and-pop bookstores out of business, losing so many bookstores still diminishes the industry because in the long run it may mean fewer readers, said Meg Smith, spokeswoman for the American Booksellers Association, the trade group for independent bookstores.
"We are always saddened when any bookstore closes," she said. "And to the extent one our members may benefit in the short term with an increase in traffic from a closed Borders location, ultimately the reading public may lose the most with fewer brick and mortar bookstores."
E-books and E-book readers: Fewer Borders stores "may lead people to consider adopting e-readers if they haven't already, but I think the broad availability of titles, and new formats like Kindle Singles, will probably do more for e-readers than necessarily Borders bankruptcy," Forrester's Mulpuru said.
The Borders bankruptcy will probably do more to help physical book sales at Barnes Noble and Amazon because that was what that shoppers purchased before the bankruptcy, she said
="briefhead">Losers
Borders workers: About 6,000 of Borders' 19,500 workers will lose their jobs in the restructuring.
Stockholders: Activist investor William Ackman and financier and Borders CEO Bennett Lebow, each with about a 15 percent stake in the company, are likely to see their investments vanish, the same as other shareholders.
Borders stock price had slid from $3.29 in April 2010 to pennies before it stopped trading after the bankruptcy filing. Shareholders are near the back of the line for payment in a bankruptcy and typically their stake is wiped out.
Publishers: Publishers were already suffering in December when Borders Group stopped paying some of its vendors as it struggled with liquidity.
Earlier this month, John Wiley Sons, which stopped shipping books to Borders in December, wrote off $9 million in bad debt expense related to Borders stopped payments.
Now, with 200 store closings, publishers are losing millions of square footage of retail space and a champion of paperbacks, which Borders particularly focused on.
Publishers credit Borders with helping books like Chris Cleave's "Little Bee," David Benioff's "City of Thieves" and Kelly Corrigan's "The Middle Place" become bestsellers.
Simba Information senior trade analyst Michael Norris said publishers will have to adjust their revenue estimates for 2011 downward immediately between 1 percent to 10 percent.