DOW JONES NEWSWIRES
Borders Group Inc. (BGP) will cut 742 jobs, less than 3% of its
work force, as it trims store management to match sales volume.
The struggling books and music retailer said it eliminated 679
manager and supervisor positions at Borders superstores, effective
Thursday. The other cuts were at its Waldenbooks specialty retail
stores, where the company also focused on reducing management and
supervisory positions.
Borders will offer transition pay and severance to all affected
employees.
"Reducing the number of leadership positions in our stores was a
necessary step as we streamline and focus our payroll investment on
the sales floor," said Chief Executive Officer Ron Marshall.
Last month, Borders cut about 12% of its corporate work force
and several high-level corporate positions to reduce management
layers. In January, the company ousted its chief executive and his
management team, installing Marshall, who has a financial
background.
Borders and its largest shareholder, Pershing Square Capital
Management LP, have extended to April 15 the expiration date of
their agreement for Pershing Square to buy Borders' U.K.-based
Paperchase gifts and stationery business. The deadline for Borders
to repay a $42.5 million loan from Pershing Square made earlier
this year was also extended to that date.
The book chain, like almost all retailers, had a disappointing
holiday season. But its problems stretch back considerably further.
A year ago, the company disclosed it faced a potential liquidity
crunch and put itself up for sale. Despite its weak stock price,
Borders couldn't find a buyer.
Borders' shares recently traded at 51 cents, down 8.9%, amid a
broad market selloff. The shares have fallen 95% in the past
year.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com