Bad Times at Borders

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The corporate takeover shocked both customers and employees—a colleague said that veteran Ann Arbor manager Joe Gable “went through all the stages of grief.” But Tom Borders told Gable that he felt it was necessary to survive “the coming bookstore wars.”

The “wars” were with Barnes & Noble, which by then had copied the Borders superstore model. The two companies would spend the next decade chasing one another around the country. In a few cases they opened competing stores across the street—or bid against each other for the same spot.

In 1995 Kmart spun off Borders as a publicly traded company. BGP debuted on the New York Stock Exchange at $7.25 a share. In the next few years, investors dazzled by the company’s 20–30 percent annual growth rate would push it as high as $40. DiRomualdo, whom the Borders brothers had brought in as a part owner, grew rich. One old hand remembers him saying, “I love this company—it made me a millionaire!” (DiRomualdo couldn’t be reached for comment.)

As intoxicating as the great growth of the 1990s was, some veterans believe it set the stage for the company’s decline. “I remember saying at a meeting, ‘We are putting the cart of store expansion before the horse of hiring good people and enough good people,’” recalls a former executive. “The response was a level gaze across the conference table and a level word—‘Yes.’”