Kobo parent Redgroup Retail in dire financial straights

Crikey, an Australian news blog, has the tale:

Redgroup Retail, parent of the Borders and Angus & Robertson chains, has been forced to jack up prices, increase returns and extend trading terms with its suppliers, according to industry sources. The company told the New Zealand Stock Exchange in July it was likely to breach two of its banking covenants at the end of the month, with debts believed to be in the order of $50-75 million.

“A whole lot of publishers aren’t doing business with them at the moment,” a senior book publishing source told Crikey. “They are asking for payment terms to be extended to as far as 120 days, which nobody is prepared to give them. In response publishers are cutting their print runs by 30% in the run up to Christmas.” Another source told Crikey that Redgroup was looking to reduce stock on shelves, up recommended retail prices and increase return credits with publishers.

About Nate Hoffelder (11463 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader: "I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

2 Comments on Kobo parent Redgroup Retail in dire financial straights

  1. Interesting article. Somewhat ominous. But what struck me were the comments on their site. Contrary to what some would have us believe, the disruption to the traditional book distribution business is *not* just the US. The chickens are coming home to roost elsewhere, too.

  2. Alexander Inglis // 12 August, 2010 at 6:18 pm // Reply

    What’s not clear is what, if any, impact would be on Kobo. Redgroup Retail is a minority shareholder in Kobo (formerly shortcovers). It could be the loss of a distribution arm for the e-readers and a hit on e-reader inventory but possibly little else. Indigo, the Canadian majority owner, hold 57.7%; Borders US, Cheong Kong Holdings and Redgroup Retail (aka Borders Australia, Whitcoulls NZ and three other brands) hold the remaining share.

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