Australian book chains Angus & Robertson and Borders have been placed into administration only hours after Borders in the USA was placed into Chapter 11. Neither company has a relationship other than a common name.Also placed into voluntary administration by its private equity owners (PEP), is the Whitcoulls chain of newsagencies in New Zealand. It was only six months ago that the Managing Director of REDgroup Retail Pty Ltd Dave Fenlon was spruiking new $199 Kobo eReader in Australia. At the time he categorically denied that the Borders chain of stores in Australia was in trouble.
At the time Fenlon said that the launch of Kobo ‘would change the way we read forever’. “Through our partnership with global eBook retailer Kobo, we are bringing a whole new level of choice, control, and flexibility to Australian book lovers,” said Fenlon.
The local group of companies have a combined staff of over 2,400 who are today waiting to see what their future holds.
During the past six months the REDgroup has been desperately trying to compete with Amazon in Australia, who is selling books online at up to 80% cheaper than what the local book stores can offer the same books for in Australia.
PEP is the same Company that was sued after they sold the George Patterson Agency to European based WPP.
They have also had trouble in the past with previous Companies that they owned when they breached a number of lending covenants with its banks.
REDgroup insiders said that the Borders chain of stores is expected to remain open in the short term, following a board meeting earlier today when directors were told that the group was facing the possibility of trading while insolvent. Ferrier Hodgson partners have been appointed voluntary administrators.
One source told ChannelNews that the recent hype concerning a 10% GST on overseas web site purchases under $1000 had not helped as a “lot of consumers” suddenly discovered that books were significantly cheaper on Amazon.co.
One franchisee said “The book Companies also have to be held responsible for this collapse as they are selling books to Australia book stores at significantly higher prices than they do to the likes of Amazon and European and US bookstores. This is going to have a devastating impact in Australia if the chain is not acquired and is closed down”.
Angus & Robertson has operated in Australia since1886 when David Angus and George Robertson opened a bookshop in Sydney.
Ferrier Hodgson partner Steve Sherman said that as far as possible it would be business as usual while the administrators conducted an urgent assessment of the business’s financial status and to prepare for the first meeting of creditors, according to a statement.