Still reeling from record losses and a continuing drop in sales in the third quarter, the Borders Group announced that it is delaying payments to some publishers. PW has learned that at least one of the “big six” New York houses has suspended shipping books to Borders, a troubling sign for the company as it attempts to find lenders to refinance its debt and provide enough liquidity to get the national book retail chain through to early 2012.
Borders carries about $450 million in trade payables on its balance sheet and many publishers are anxiously waiting to see which houses will be paid and which will not be. Battered by weak adult trade sales, the rapid growth of e-book sales (and it’s own delayed effort to enter the e-book market) and the closing of more than 200 stores, Border’s dismal third quarter saw drops of 12.6% in store comp sales. While the company has faced crises over its debt service in the past and managed to find financing, the current crisis looks to be Borders’ toughest challenge ever.
