Attention shoppers: If you live near one of the 200 Borders bookstores slated for closure, some nice buying opportunities may be coming your way.
As I mentioned in a previous post, Borders filed bankruptcy this past Wednesday and announced plans to close 200 of its 642 stores. Yesterday, the bankruptcy court approved Borders' sale of the inventories in the marked stores to a consortium of liquidating companies. What will most likely happen is the liquidating companies (which specialize in this sort of thing) will conduct a store-closing sale at each of the locations condemned to die. According to the Dow Jones Daily Bankruptcy Review (not available on-line, but many of the source documents can be seen here), Borders will get about 85% of the cost of the inventory plus 50% of the sale proceeds above the 85% mark and certain fixed amounts payable to the liquidating companies.
What does that mean to you and me? Since time immemorial, retail bookstores have customarily marked up books 100%. (Or, to put it another way, the "list price" of a book is usually twice what the bookstore pays for it.) So, if a hardcover book lists for $25, we can assume that it represents a cost to Borders of $12.50. Actually, the cost might be a bit less than that, because big buyers such as Borders can get better terms from publishers. In any event, the liquidating companies are paying Borders 85% of its cost, or $10.62 for our hypothetical book. If the liquidating company then sells the book at a 40% discount ($15), it pays Borders $10.62, pays itself certain selling expenses and fees, and splits whatever is left 50/50 with Borders.
This can result in some good deals for the patient and lucky. Years ago, when Encore Books breathed its last, I was able to get a new, unabridged Merriam-Webster's Third (yup, the Big Boy) at half price at our local store. (They had one copy on the shelves, waiting for the day when some copy editor or word nut would wander in off the street and buy it, I guess.)