More Borders stores closing

Borders continues to shed and trim its operations. An article was published this morning stating the chain will close more stores come January. The one thing Borders may not be able to shed so easily will be its debt load. It will be interesting to see how the company is doing with its cash flow when they report November 24th. With current liabilities close to $971m, their current ability to generate cash is pretty dismal. In the 3rd quarter the company generated $43.0m in cash from operations, and repaid their credit facility $46.4m. Essentially what comes in on one hand, comes right out of the other... and then some. This isn't just for the most recent quarter either. The past two quarters show the same story. If you look at the same period a year ago, $54m in cash generated and a $126.1m repayment on their their credit line.

Will Borders have an answer to Amazon, Walmart, and Barnes and Nobles? I don't think so. My concern last May was centered around their cash flow. It was just a concern, a warning to stay away from them. Now, I am 100% convinced they will not make it given light of what has transpired over the past few months.