[LINK] Border(AU) and A&R on brink

Jan Whitaker jwhit at janwhitaker.com
Thu Feb 17 16:17:39 AEDT 2011


"Borders, Angus & Robertson go bust
Eli Greenblat
February 17, 2011 - 3:51PM

       Comments 14

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.

Expansion

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 
and territory.

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.

Debt strain

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"

http://www.theage.com.au/business/borders-angus--robertson-go-bust-20110217-1axt9.html

  http://snipurl.com/22jils


Melbourne, Victoria, Australia
jwhit at janwhitaker.com
blog: http://janwhitaker.com/jansblog/
business: http://www.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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