Marketwatch says that today "Borders Group Inc., lagging in an "increasingly competitive" industry, on Thursday outlined a reinvention strategy, with a plan to focus on domestic superstores, slash the size of its Waldenbooks chain and consider alternatives for its international business." One of the primary features of this restructuring involves " nearly halving its Waldenbooks chain to 300 stores from 564 by the end of 2008."
Waldenbooks stores are located in malls in rectangular spaces with stacks of bestsellers at the front backed by a magazine rack and then a few rows of shelves with genre inventory. I am an avid book purchaser and before Barnes and Noble re-invented the bookselling business Waldenbooks was one of the few places I could find a source of new reading material. Market conditions have changed now. I personally have walked by Waldenbooks sometimes but have never been tempted to go in. I expect to be able to sit in a comfortable chair and be able to read a few snippets of the books I am thinking about buying; and I expect the broad selection and variety of price points that can be found at Barnes & Noble and to a degree at Borders' eponymous stores.
I think that Borders should jettison the Waldenbooks concept altogether. Given that bookselling is a thin-margin business and mall rents are high relative to other types of retail real estate, exiting malls should provide a boost to gross margins. The capital tied up in these stores would be better invested in their superstores. I believe the reason that they are not closing all of the Waldenbooks stores now is due to mall leases that don't expire for a while. I'm not making a stock recommendation here, but I think that these moves will be positive for Borders.
No comments:
Post a Comment