triage

One of the other pieces of news from Borders was that an additional # of stores would be closing besides the 16ish that had been announced and which have been having their clearance sales in recent weeks. Borders spokesman told Publishers Lunch those numbers would not be commented on, publisher sources say another 10-17.

If you are a retailer, and you are in a cash bind, the very first and most important person you need to pay is your landlord. Your landlord is the one person in the world who can change your locks. And if the landlord changes the locks, you lose access to all of the assets including inventory and fixtures that might have liquidation or sales value for you. The second person, the electric company, because you need the lights on and the cash registers working. Publishers, employees, all of those people need to get paid after you pay the landlord.

If I'm a publisher or possible lendor, a question I might ask is "so how many stores with a lease up from July 2010 to July 2011, did you renew?" It is possible just by random dumb luck chance that indeed there were 25 leases up this year, and none worth renewing. Westwood CA was too big. Chestnut Hill MA in a rare mall where I think the landlord could get a new tenant for considerably more rent. Portland OR downtown seemed even many years ago like a flagship store without quite flagship sales, has to be worse than that now. Especially considering the size and type of box Borders was building 15 years ago for books, music and movies, it is possible good real estate choices were hard to find in this renewal crop.

Getting a good straight answer to that question is crucial, though, because it helps to suggest if there's some chance that Borders can economically renew a superstore lease next year or the year after that, or if even Borders thinks its hard to keep paying the landlord.

I humbly suggest that at none of these closed stores did Borders get any ROI on their rounds of remodels.