On February 19th, Borders Group (NYSE: BGP) announced that it was laying off 136 of its corporate-level workers -- 12% of its corporate workforce and 1% of its overall employee base.A couple weeks later, the cuts are getting even more draconian as the company deals with a massive debt load and poor sales that threaten its viability. In a press release issued mid-way through the trading day, Borders announced that it was cutting 742 store workers, equal to a little less than 3% of the company's overall workforce.
According to the press release, "No changes were made at the general manager level -- the top position in each store -- but in the majority of Borders locations, one or two other leadership positions, such as sales managers, inventory managers, training supervisors and merchandise supervisors, were eliminated as the company resets its superstore management structure to correspond to sales volume on a store-by-store basis."
Borders has to do what it has to do to stay alive but the problem with these cuts is that they will almost certainly effect customer service. With superstores like Wal-Mart Stores, Inc. (NYSE: WMT) and websites like Amazon.com, Inc. (NASDAQ: AMZN) offering better deals, the only way that Borders can compete is to provide a more compelling shopping experience than either of those competitors.
Even if Borders is able to cut costs fast enough to stay in business, it may leave itself with a corpse of a business that doesn't provide anything good enough to survive long-term against less-expensive, better-finance competitors.
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