[LINK] Border(AU) and A&R on brink
jwhit at janwhitaker.com
Thu Feb 17 16:17:39 AEDT 2011
"Borders, Angus & Robertson go bust
February 17, 2011 - 3:51PM
Australian book chains Borders, Angus & Robertson and the Whitcoulls
chain of newsagencies in New Zealand have been placed into
administration by its private equity owners only a day after the
Borders company in the US also collapsed.
The local companies have a combined staff of about 2500.
The failure of Borders in Australia is not linked to the woes facing
its namesake in America - they are owned by different corporations -
but both have suffered from the rise of internet book sales and
constrained consumer spending.
REDgroup, a business that controls a portfolio of retail operations
in Australia and New Zealand, is controlled by private equity firm
PEP and has had a troubled few years that have seen it breach a
number of lending covenants with its banks.
BusinessDay has learned that REDgroup was forced to call in
administrators to the businesses this afternoon following a board
meeting. Although its flagship Borders franchise is expected to
remain open in the short term, its future in Australia and the jobs
of its staff are now in doubt.
The outlook is similarly grim for Angus & Robertson, which has a
corporate history in Australia that dates back to 1886 when David
Angus and George Robertson opened a bookshop in Sydney.
New Zealand-based Whitcoulls is of even older vintage. Originally
named Whitcombe & Tombs after its founders joined their businesses in
1882, according to the company's website.
Borders opened its first store in Australia in October 1998 at the
Jam Factory in upmarket inner Melbourne suburb. A year later Borders
opened its first New Zealand store in Queen Street, Auckland. Over
the next eight years Borders opened new stores in Australia, New
Zealand and Singapore.
Angus & Robertson is Australia's largest book retailer and has 103
directly owned stores and 61 franchised stores located in every state
Retailers have come under sustained earnings pressure over the last
year due to higher interest rates, a return to thrift by consumers
and a general increase in the cost of living.
Businesses such as Borders have been particularly hard hit by the
rise in popularity of e-commerce sites that sell a vast range of
books online at heavily discounted prices to traditional
bricks-and-mortar shops. The strengthening Australian dollar has also
encouraged shopping on overseas websites.
REDgroup has also felt the strain of the debt it took on as it was
taken over by private equity and prepared for a sharemarket float.
In October REDgroup unveiled a full-year loss of $43 million, which
it said was mainly attributable to non-cash inventory provisions as
it completed its integration of Borders and rationalisation of old ranges.
Last year the company warned it was likely to breach two of its three
of its banking covenants due to increasingly tough trading conditions.
egreenblat at theage.com.au"
Melbourne, Victoria, Australia
jwhit at janwhitaker.com
Our truest response to the irrationality of the world is to paint or
sing or write, for only in such response do we find truth.
~Madeline L'Engle, writer
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