Borders' Has Sold Former Ann Arbor Headquarters

Story first appeared on The Detroit News -

Price Not Disclosed; Buyer Asked For Confidentiality

The former Ann Arbor headquarters of defunct bookseller Borders Group Inc. has been sold to an unidentified buyer who requested a confidentiality agreement, the Ann Arbor office of Colliers International said Friday.

The development follows an October statement by the site's broker, Jim Chaconas, that the 330,000-square-foot campus for the former bookstore chain that liquidated and closed in 2011 would soon be sold.

The headquarters building and campus was listed for $6.9 million in early 2012, and Chaconas said in October that the prospective buyer came "pretty close" to that number.

Chaconas said then that he was working with three tenants to move into the property.

One would occupy all of the smaller, 87,000-square-foot building and others would share the larger, 243,000-square-foot building.

Because of the confidentiality agreement, it is not clear whether new tenants will move in or whether a new owner has bought the building and has different plans for the property.

Chaconas was not available for comment. In October, he said the site is large enough to allow tenants to expand and has more than 1,200 parking spaces.

Before Borders decided to liquidate in July 2011, it had 440 staffers at the corporate campus at 100 Phoenix Drive and occupied only a portion of a building.

The headquarters' former owner, Farmington Hills-based Agree Realty Co., defaulted on a $5.6 million loan in 2011. Colliers International was hired to handle the sale of the property after a settlement agreement was reached with Agree Realty.

Borders Announces 124 Layoffs

Detroit Free Press

Borders Group Inc. informed 124 employees this morning that they would lose their jobs.

The layoffs, effective today, apply to 88 employees at the Ann Arbor headquarters and 36 other corporate employees across the country, said Borders spokeswoman Anne Roman.

The number represents less than 1% of the bookseller’s total employee count, but added to other layoffs in recent years its impact at corporate headquarters is big. Borders has shed nearly half of its corporate headquarter employees in the past two years. It now employs 650 people there, compared with 1,232 in 2008.

The layoffs come after news Tuesday that Borders CEO Ron Marshall was leaving the company and it reported weak holiday sales.

“The company didn’t drive sales to the level it needed to,” Roman said. “Companies need to keep payroll aligned with the reality of where sales are.”

Borders also recently consolidated its technology and financial systems for Borders and Waldenbooks stores and needed fewer people in those areas, she said.

Employees whose jobs were eliminated will receive transition pay, severance and job placement assistance.

Borders Group Profit Falls Amid Dropping Sales

As Originally Posted to the Wall Street Journal

Borders Group Inc., the second-largest U.S. bookstore retailer by sales, on Tuesday evening reported a plunge in earnings for the fiscal fourth quarter but reduced debt by $218 million at year-end and sharply cut inventory levels.

The retailer has been slashing payroll and paring costs as the book business has slumped amid the recession. It has announced three rounds of layoffs since Jan. 1, totaling nearly 900 employees.

In the quarter ended Jan. 31, Borders earned $29.6 million, or 49 cents per share, down from $64.7 million, or $1.10 per share, a year earlier. Sales fell 13% to $1.09 billion from $1.26 billion. Comparable-store sales, a key economic indicator, declined 15.3% at Borders superstores and 4.7% at Waldenbooks. For the fiscal year, same-store sales at the superstores fell 10.8%, and 5.1% at the mall stores.

"We have taken a lot of expense out of the system, and reduced debt and inventory," said Ron Marshall, chief executive, in an interview. "Our major vendors have been very helpful. But there are several things we need do from a marketing and merchandising perspective."

Mr. Marshall said the chain intends to focus more of its energies on promoting specific titles, and cited two recent books that he said Borders has helped turn into national best-sellers, Jamie Ford's novel "Hotel on the Corner of Bitter and Sweet" and Kelly Corrigan's memoir, "The Middle Place."

As for revenue, Mr. Marshall said that he expects 2009 to continue to be challenging but that he thinks the economy could strengthen next year. "We were very conservative in our sales forecasts," he said. "We want to be sure that in a difficult environment we get to the other side." He noted that the retailer will trim another $70 million in expenses in the current fiscal year.

Late Monday, the retailer, based in Ann Arbor, Mich., disclosed that it had extended for another year its $42.5 million loan agreement with Pershing Square Capital Management LP, its largest shareholder. It also agreed to let expire a put option that could have forced Pershing Square to buy its U.K.-based Paperchase stationery business for $65 million. Mr. Marshall said he considered Paperchase to be a "core asset" and that he didn't want to sell it.

Borders Shares Fall Ahead of Earnings Report

Deepening concerns about holiday book sales and third-quarter earnings pressured Borders Group Inc. Friday as its stock dipped below a dollar during trading before rebounding slightly.

The number of customers walking into bookstores has fallen sharply in the past month and investors are concerned that Borders will show further signs of weakness when it reports quarterly results Tuesday. The book retailer is expected to post a loss of 50 cents a share, according to analysts polled by Thomson Reuters.

Borders' quarterly results follow Barnes & Noble Inc., the nation's largest bookstore chain by sales, which Thursday released disappointing third-quarter results and lowered its full-year earnings forecasts.

In 4 p.m. composite trading on the New York Stock Exchange Friday, shares of Borders, based in Ann Arbor, Mich., fell 19% to end at $1.11, after earlier slipping to 72 cents. Borders, which enjoyed a 52-week high of $13.23, had a market capitalization at day's end of $83 million.

Borders in March surprised publishers and investors by disclosing a possible cash crunch and putting itself up for sale. Borders has since sold off most of its foreign assets and reduced its debt, which totaled $465.7 million at the end of the second quarter ended Aug. 2, according to a Securities and Exchange Commission filing.

Borders' remaining international assets includes its U.K.-based Paperchase stationery business. Under terms of a deal struck earlier this year, Borders' right to compel a sale of that property to its largest shareholder, Pershing Square Capital Management LP, for a price estimated at $65 million, ends Jan. 15. Pershing Square is headed by activist investor William Ackman.

Despite investors' concerns, several publishers said on Friday that Borders is paying its bills. "They are paying us on time and we are shipping them books," said David Steinberger, chief executive of Perseus Books LLC, a unit of Washington private-equity firm Perseus LLC.

A spokesman for Bertelsmann AG's Random House Inc. declined to comment except to note that Random House continues to ship Borders new titles. Brian Murray, CEO of News Corp.'s HarperCollins Publishers, said Borders is paying its bills on time but noted that HarperCollins is being "prudent" about volume. "We are very aware that consumers aren't spending as they once did. We've reduced the quantities of our printings and are relying more on just-in-time resupply." News Corp. also owns Dow Jones, publisher of The Wall Street Journal.