WSJ Blogs

Real-time commentary and analysis from The Wall Street Journal
Deal Journal
An up-to-the-minute take on deals and deal makers.

Borders Bankruptcy: Everything You Need to Know

Associated Press

UPDATED, 2/16/11: Borders Group, the chain that helped introduce mega book stores into every nook and cranny of America, filed for bankruptcy protection.

In a statement, the company said:

“It has become increasingly clear that in light of the environment of curtailed customer spending, our ongoing discussions with publishers and other vendor related parties, and the company’s lack of liquidity, Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term…We are confident that, with the protection afforded under Chapter 11 and with the support of employees, publishers, suppliers and creditors, and the reading public, a successful reorganization can be achieved enabling Borders to emerge from the process as a stronger and more vibrant book seller.”

It’s hard to imagine we’d be feeling nostalgic for Borders, which many small town book sellers believe was a killer for their businesses.

Still, the bankruptcy filing is a sad capstone for the 40-year-old Borders. The retailing pioneer and 1990s high flier had an all-time-high stock price of nearly $40 in 1998. Now, it’s stock price is sinking to about 15 cents in pre-market trading Wednesday.

Here is a snapshot of Borders’ history, finances and trivia.


The Borders brothers, Tom and Louis, in 1971 started a used books store in Ann Arbor, Mich., aimed at the nearby University of Michigan. Even as they shepherded explosive growth of the bookstore chain, the Borders brothers hewed to an image of college town funkiness.

Borders bragged that its store staffers took written tests to prove their knowledge about the arts. Tests questions, the Wall Street Journal reported in 1996, included: Who wrote “Thus Spake Zarathustra” and “Mrs. Dalloway”? (Answers: Friedrich Nietzsche and Virginia Woolf)

Borders opened roughly 40 superstores a year in the mid-1990s, according to regulatory filings. The rise of Borders and its fierce rival, Barnes & Noble, also inspired angst and shook up –- critics said destroyed—the independent bookstore business.

“I still don’t understand where all the customers are supposed to be. They’re erecting giant bookstores now like Midas Muffler shops, but books aren’t mufflers. Are people throwing out their television sets?” – Joan Hulbert, owner of five Booksellers stores in Cleveland, told The Wall Street Journal in 1992


In 1992, the Borders brothers sold their chain –- then about 20 super stores — to Kmart at a price pegged at about $125 million, the Journal reported at the time. Kmart combined the bookstore chain with its own Waldenbooks arm. Kmart renamed the chain Borders Group Inc., and in 1995 the chain became a public company with roughly 80 of Borders’ super stores, 1,000 Waldenbooks mall-based stores, and music retailer Planet Music.

The Sausage Connection:

Robert DiRomualdo, CEO of Borders from 1989 to 1998, used to run the Hickory Farms chain of sausage-and-cheese shops

The Tech bubble connection:

One of the Borders brothers, Louis, also was a founder of Webvan, the infamous Internet grocer and tech bubble flamout.

Revenue, Then and Now

1996*: $1.96 billion

2010+: $2.3 billion


1996*: $103 million in operating income

2010: loss of $168.2 million, as of Dec. 25, according to a Borders court filing.

Comparable store sales growth:

1996*: +9.9%

3Q 2010: -12.6%



129 books and music superstores under the Borders name

More than 950 Waldenbooks shops based in malls and elsewhere

Six Planet Music music superstores


About 640 (including Waldenbooks stores).

Borders said it plans to close about 30% of its “national store network” over the next several weeks. Borders said its remaining stores will continue operating as usual.


1996*: $30.5 million in short term and current portion of long term debt; $6.2 million in long term debt and capital lease obligations

As of Oct. 30, 2010:

$55.8 million of long-term debt and $298.4 million in short term debt or the current portion of long term debt.

* (year ended Jan. 26, 1997)

+ year ended Jan. 29, 2011

Add a Comment

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 41)

View all Comments »
    • I am truly sorry to see them go! My comment is directed at those folks who had “Zen” days at the local Borders book store. I was in one of the stores where a customer commented that she was disappointed that Borders is going out of business, because she would spend at least one “Zen” day a week at the store, reading and sipping coffee. She recounted her delight spending her day reading her favorite magazines and exploring recently released books without having to purchase them. Her concern was; “where can I go to spend her Zen days after you are gone?” Sorry to see the store go, and for those “Zen” folks out there, may I suggest making a purchase or two from the next bookstore you enjoy…

    • Sorry to see them go….however, some of the other bookstores provide better service. What happens to those individuals who still have Borders gift cards????

    • Lyla, this has far less to do with the value of face to face conversations or old technology vs new technology, and far more to do with profit and loss. When you’re the head of a company and you’re losing millions of dollars each year – pending the failure of your company – it’s time to cut the losses before you go to far into debt and end up in bigger trouble.

      It is really sad to see it go, but this is a business decision for the betterment of everyone employed there. Imagine if the company decided to stay open but couldn’t afford to send out checks to their employees? Wouldn’t that be worse than just closing?

      Emotions aside [and I do understand the loss], this is the best thing for a dying chain.

    • Borders also failed with older technology. Restocking orders coudl take weeks while other chains took a day or two. Borders was still putting is own labels instead of using the industry standard pre-printed UPC andf EAN barcodes.

    • I hate this! And no one can see it, but stupid technology is just making less jobs. People are getting layed off because of this. I love books and a lot of old fashioned things and people just don’t seem to value that anymore. It just…makes me so sad. People don’t even talk face to face as often anymore an it’s…it’s horrid. No seems to notice either. I miss the simplicity of things. One of the joys of reading is feeling the pages beneath your fingertips.
      I’m not say technology is exactly a bad thing, but there are bad things that come along with the good.

We have moved to MoneyBeat

  • Dear Reader,

    Thanks for reading Deal Journal. We would like to direct you to MoneyBeat, the Wall Street Journal’s brand new global blog. MoneyBeat unites MarketBeat, The Source, Overheard and all the Deal Journal blogs, bringing together all the market, M&A, IPO and hedge-fund news from those blogs into a 24-hour hub for finance news. Check it out and let us know what you think at

About Deal Journal

  • Deal Journal is an up-to-the-minute take on the deals and deal makers that shape the landscape of Wall Street, including mergers and acquisitions, capital-raising, private equity and bankruptcy. In short, wherever money changes hands. Deal Journal is updated throughout each trading day with exclusive commentary, analysis, data, news flashes and profiles. The Wall Street Journal’s David Benoit is the lead writer, with contributions from other Journal reporters and editors. Send news items, comments and questions to

    • Deal Journal on Twitter
    • Deal Journal on Facebook