Borders, the US’s second largest bookseller, is considering a sale of its UK stores due to struggling sales in a “challenging” retail environment.
Merrill Lynch were hired to conduct a strategic review of its international business, 70 percent of which is represented by the UK. The overseas arm reported losses of $500k US dollars in the year to 3rd February, compared with profits of $6m dollars the previous year.
Competition from low price supermarkets and the internet has affected high street stores across the sector, leaving analysts at a loss to name a likely trade buyer. However, it is said to be highly unlikely that the stores will be closed, with the most likely option being a private equity buyer which would retain the management team in place.
Borders’ “successful” Paperchase brand is unaffected by the decision.
Borders entered the UK market in 1998 when it acquired Books etc, and opened its own branded store in August that year. Earlier this year, the company claimed to be committed to investment in the UK, informing a competition commission enquiry it was looking to expand its superstore format in the UK, with plans to open seven more stores each year for the following seven years.
President and CEO George L Jones commented “For us to be successful in reaching the goals we have for the US domestic superstore business, we must significantly reduce investment in the international segment and explore strategic alternatives. Theses are excellent businesses with dedicated employees and a talented management team. We are grateful for their efforts to help this segment grow,”
CEO of Borders UK and Ireland, David Roche, said “Borders and Books etc. operate in dynamic markets here in the UK and we are excited about exploring strategic alternatives for the business. We believe firmly that we have both the management and plans in place to continue to grow Borders as a successful player with a unique position in the markets that we operate in.”
