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Several of D.C.'s suburbs are losing their Borders bookstores.
The chain's pioneering superstores put many mom-and-pop shops out of business, and now it's getting the same treatment from technology. Big-box bookstores have struggled as online book sales grow and electronic books gain popularity.
Borders, which filed for bankruptcy protection Tuesday, plans to close about 200 of its 642 superstores, including its locations at 1801 K St. and 5333 Wisconsin Ave. in northwest D.C., and stores in Kensington, Bowie and Largo in Maryland, and Vienna, Stafford and Winchester in Virginia. The closures do not include the company's smaller Waldenbooks and Borders Express stores, so you can still drop by the Borders at Ronald Reagan National Airport to pick up something to read for your flight.
The 40-year-old company will receive $505 million in debtor-in-possession financing from GE Capital and others to help it reorganize, the Associated Press reported. In January, Borders said it was considering a bankruptcy filing after it received a conditional $550 million loan from GE Capital that required it to secure financing elsewhere.
According to the Chapter 11 filing with the U.S. Bankruptcy Court in the Southern District of New York, Borders had $1.28 billion in assets and $1.29 billion in debts as of Dec. 25.
It owes tens of millions of dollars to publishers, including $41.1 million to Penguin Putnam, $36.9 million to Hachette Book Group, $33.8 million to Simon & Schuster and $33.5 million to Random House.
In addition to failing to catch on to the importance of online sales and electronic books, Borders also didn't react quickly enough to declining music and DVD sales and hired four CEOs without book-selling experience in 5 years.
Even as the book industry shifted around it, Borders seemed to be in denial and focused on adding superstores, said Michael Norris, senior trade analyst at Simba Information.
"Books and content just became so available at so many other locations, online and offline, the 'grow, rinse, repeat' mindset just wouldn't work anymore," he said.
In addition, Americans are simply buying fewer books. Sales fell almost 5 percent in 2010 to 717.8 million from 751.7 million last year, according to Nielsen, which tracks about 70 percent of book sales but doesn't include Walmart stores.
At its peak in 2003, Borders operated 1,249 stores under the Borders and Waldenbooks names, but now it operates barely half that. Its annual revenue has fallen by about $1 billion since 2006, the last year it reported a profit.
Borders' rival Barnes & Noble, which has 29.8 percent of the book market compared with Borders' 14.3 percent according to IBIS World, has done better by adapting to e-commerce and electronic books more quickly and keeping management stable.
By the time Borders' current CEO, financier Bennett LeBow, came aboard in May 2010 after injecting $25 million into the company, the ship was listing badly.
The bad news began to pile up December: Borders suffered its ninth consecutive money-losing quarter, a key holiday sales figure fell a dismal 14.6 percent and the company announced it was delaying payments to some vendors to preserve cash.
Fordham University marketing professor Al Greco said Borders can operate with fewer stores, but the same challenges remain, Greco said.
"This is not a good day for book retailers, book readers and book publishers," Greco said. "It's a serious problem that a major chain that did a nice job for many years could not survive."