Struggling bookshop chain Borders has gone into administration, ending days of speculation and casting a dark cloud over its 1150 staff.
More than 100 workers face an uncertain future at the firm’s two Glasgow branches and at its other Scottish stores in Edinburgh, Dundee and Inverness.
The administrators are now looking to maximise income from the sale of the company and its 45 UK outlets, but they have warned that the position of book retailers in general is “weakening” in the face of spiralling competition.
The company may be bought as a going concern, but escalating losses of more than £10m in each of the last two years could be seen as proof that its current business model is not working. Rival firm WH Smith reportedly walked away from negotiations late last week, but Waterstone’s parent company HMV is said to be interested in some or all stores.
The branches on Glasgow’s Buchanan Street and in the Fort retail park are understood to be operating in profit, but efforts to find a buyer have so far proved fruitless.
Accountancy firm MCR, which was appointed yesterday after another company refused to take on the job due to a conflict of interest, blamed Borders’ demise on a combination of factors striking at once.
It said that pressure from online retailers such as industry giant Amazon had worn down the high street chain and led to sales falling behind the levels of previous years. Supermarkets selling cut-price bestsellers have also hurt traditional booksellers.
A statement from MCR said “severe cash flow pressure” had impacted on Borders, leading to several of the company’s suppliers – including at least two of the UK’s four biggest book distributors – axing deliveries to the chain.
A number of credit insurers had also reduced their cover, the administrators said, further impeding Borders’ ability to operate.
All 45 Borders branches will remain open as normal while MCR seeks a buyer for the business, which could be off-loaded as a whole or stripped down and sold in smaller parts.
Joint administrator Phil Duffy said there had already been interest in some of the company’s stores, adding a reassurance to staff that “all outstanding employee wages have been paid up to date and ongoing wages for retained staff will continue to be paid as an expense of the administration”.
He continued: “The appointment of MCR as administrators to the business is indicative of the weakening position of book retailers in the current market, with competition on bestsellers from supermarkets and the growing strength of the digital and online markets in this sector.”
Borders opened in Britain for the first time in 1997, 26 years after brothers Tom and Louis Borders established its American parent in 1971. The UK operation was spun off from the Borders Group in 2007, but has made multi-million pound losses in each of the last two years.
l More than 50 Scottish jobs are to be cut under a major restructuring at BAE Systems, with a further 600 set to go across the UK.
The affected positions are all in Fife, and a spokesman stressed that the shipbuilding side of the business, which employs around 4000 people in the west of Scotland, was not at risk.
About one-sixth of the workforce will be cut from the Hillend plant near Dunfermline, and a total of 642 staff will lose their jobs around the UK. The affected locations include Portsmouth, Surrey, the Isle of Wight, Essex, Dorset, Bristol and New Malden.
The Fife facility produced the British Army’s Terrier vehicle training equipment, and supports other major programmes including the Royal Navy’s Astute submarine training system
