The delicate state of the Borders GroupÂ’s financial situation came to light late last week as the company was warned by the New York Stock Exchange (NYSE) that its stock might be Â“de-listed.Â”
The book selling entity was given 6 months to correct the situation in which its stock needed to meet a minimum average closing price of $1 a share for 30 days. Currently the Borders stock is trading around 39 cents a share, and this has been the case for the past month, except for a brief period, according to reports by Shelf Awareness and AnnArbor.com.
The company had experienced a similar problem in 2009 during the financial crisis. However, so many companiesÂ’ stock prices went into such a free-fall that Borders was not singled out. Back then, the NYSE suspended the rule, and the Borders stock rose accordingly over time. This time, the situation is less certain.
Just what is contributing to such a decline in stock value? Clearly, many retailers are still experiencing the pains of the economic slowdown, so Borders is not alone. However, with the Christmas boom ended, and retail business back to normal (and continuing growth in the online market, particularly with e-books), Borders will have to take some drastic measures to increase its stock price.
It appears that Borders is just one more company in a long line of businesses that depend heavily on traffic to brick-and-mortar stores for strong financials. Further, Borders like other book-selling entities depend on publishing blockbusters (like the Harry Potter series) to draw crowds in. Given less-than-sterling personal disposal income rates among average American book buyers, is BordersÂ’ fate already sealed? Check back in 6 months.