JOC Staff | Jan 12, 2011 8:56PM EST
Borders will close its Nashville, Tenn., distribution center and scale back its supply chain as the bookstore chain struggles with declining sales in a market buffeted by digital book sales and e-commerce.
The Michigan-based books retailer, which saw sales decline 17.6 percent in its most recent quarter, will close the Nashville site in July and lay off 310 workers, leaving the company with two U.S. distribution centers, in California and Pennsylvania.
“After an extensive review of its supply chain, the company found it has excess capacity in its distribution network and requires only two distribution centers to process and ship inventory to stores,” Borders said in a statement.
The company has faced growing losses in the changing books sales market, and a report in The Wall Street Journal this month said one of its distributors, Rowan and Littlefield Publishing, had suspended shipments to the chain. The company told some publishers and vendors in December that it was suspending payments.
The Wall Street Journal reported Wednesday the chain was talking with some publishers about getting direct delivery of books to some stores in exchange for guaranteed payment.
Competition from the digital world ramped up strongly last year with strong sales of the Apple’s iPad and the Amazon.com Kindle, reading tablets that allow for immediate and cheap distribution of electronic versions of books.
Borders’ bottom line has been hit hard. The company lost $74.4 million in its fiscal third quarter ending Oct. 30, 2010, double the loss from the year before, and same-store sales were down 12.6 percent. Even Internet sales fell 8.6 percent as customers went to other sellers.
The company slashed its inventories some $233 million but has still struggled with a deteriorating balance sheet.
Borders said in its statement that the closing of the Nashville facility is not related to Borders' previously reported refinancing effort or the delay of certain vendor payments in connection with the refinancing effort."