Bay Area readers will have fewer bookstores to browse now that Borders is closing 200 stores nationwide -- including a dozen in the Bay Area -- as part of a bankruptcy filing.
Borders, which helped pioneer superstores that put countless mom-and-pop bookshops out of business, filed for bankruptcy protection Wednesday, sunk by crushing debt and its own sluggish response to growing competition from online stores, e-readers and discount retailers.
In the Bay Area, plans call for closing 12 stores, including two in San Jose -- in Santana Row and at the Oakridge mall -- and two in San Francisco. Other store closures will occur in Los Gatos, Alameda, Fremont, Pleasanton, San Mateo, San Ramon, Santa Cruz and Union City. In addition, stores in Stockton and Modesto will close.
The news was a disappointment for a handful of customers, many of them self-described avid readers, who were browsing the shelves Wednesday at the Borders in Los Gatos, or reading quietly near the coffee bar that shares a common area with the store on University Avenue.
"I will really miss it," said Rhonda O'Neal, a 48-year-old Menlo Park resident and avid reader, who said she usually stops at Borders once a week after visiting a friend in Los Gatos.
News of the closing came as a surprise to O'Neal. But even though she has a Borders membership card that she uses at the store, O'Neal also said she occasionally shops online and recently began using an e-reader -- two consumer trends that analysts say were partly responsible for Borders' financial troubles.
O'Neal said she had resisted the idea of an electronic reader until she received an Amazon Kindle at Christmas. "I never thought I would like it, but I have to admit that I am using it more than I thought I would."
Borders said the stores scheduled to close will hold sales this weekend and actual closing dates will occur in the next few weeks. The company also said it is losing about $2 million a day at the stores it plans to close.
The 40-year-old company will close about 200 of its 642 stores in the next few weeks, according to Borders spokeswoman Mary Davis. The company also operates smaller Waldenbooks and Borders Express stores.
The Bay Area stores that will remain open are in Milpitas, Sunnyvale, Palo Alto, Emeryville, Pleasant Hill and San Francisco's Stonestown mall.
Borders Group President Mike Edwards said in a written statement that cautious consumer spending, negotiations with publishers and other vendors and a lack of liquidity made it clear Borders "does not have the capital resources it needs to be a viable competitor."
Borders plans to operate normally and honor gift cards and its loyalty program as it reorganizes.
The company will receive $505 million in debtor-in-possession financing from GE Capital and others to help it reorganize.
According to the Chapter 11 filing, 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.
Activist investor William Ackman, whose Pershing Square Management has a nearly 15 percent stake in the company, also stands to be a big loser. He offered to finance a $16-a-share Borders-led takeover bid for rival Barnes & Noble in December, but nothing materialized.
The filing was expected, but it is far from clear if it will be enough to save the company.
"Chapter 11 does not solve any business problems at all," said Jim McTevia, managing partner of turnaround firm McTevia & Associates, in Bingham Farms, Mich. "They are going to have to be an entirely different company than the one that went into bankruptcy protection if they want to emerge successfully."
It has been a long fall for the Ann Arbor, Mich., company, which appeared to be the future of bookselling 15 years ago.
But big-box bookstores have struggled as competition has become increasingly tough as books become available in more locations, from Costco to Walmart, online sales grow and electronic books gain in popularity.
Borders also suffered from a series of errors: Failing to catch onto the growing importance of the Web and electronic books, not reacting quickly enough to declining music and DVD sales, and hiring four CEOs in five years without bookselling experience.
Staff writers Brandon Bailey and Eve Mitchell and The Associated Press contributed to this report.
Some Bay Area Border bookstores slated to close.
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