Walden Book Company Inc. Business Information, Profile, and History
Ann Arbor, Michigan 48106
History of Walden Book Company Inc.
Walden Book Company Inc., a subsidiary of the Borders Group, Inc., is a leading U.S. mall-based book retailer, with over 1,035 Waldenbooks stores located in all 50 states and the District of Columbia. To offset a trend of falling attendance in malls in the 1990s, Waldenbooks was introducing its own version of a superstore during this time, establishing such outlets as Waldensoftware, Waldenkids, and Waldenbooks & More across the country in suburban areas. Despite downsizing and restructuring in 1994 and 1995, Waldenbooks has continued to dominate the book world and when combined with its sibling, Borders Books & Music, the two booksellers were second only to Barnes & Noble in sales in 1995 and gaining quickly.
Today's Waldenbooks traveled through many incarnations since its origins in March 1933. As the Great Depression raged and forced banks to close their doors, Lawrence W. Holt and Melvin T. Kafka bravely founded a company in New York City, one they believed would help people cope with the effects of the Depression. Specifically, Holt and Kafka's new company lent popular books for three cents a day, saving people the cost of purchasing. Since most people needed some release and entertainment during that time, Holt and Kafka's book rental libraries seemed to be a proposition that couldn't lose.
A former sales manager for Simon & Schuster, Holt was no stranger to the publishing and bookselling industry. Kafka and Holt opened several rental libraries within major department stores in the northeast, beginning with Read's in Bridgeport, Maine; Filene's in Boston; and G. Fox Department Stores in Hartford, Connecticut. As interest grew, the partners expanded and dozens of rental libraries sprouted throughout city shopping districts on the East Coast.
By 1948, there were 250 rental libraries doing a brisk business, as well as many leased book departments in stores selling books. This year the company relocated its 15 employees from New York to a new headquarters at 179 Ludlow Street in Stamford, Connecticut, closer to its many outlets.
From Library to Bookseller
In the early 1950s, cheap paperback books became the rage. Publishers, able to produce in mass quantities, could afford to sell paperbacks for as little as 25 cents apiece. In turn, demand mushroomed and Hoyt and Kakfa considered converting their rental libraries to retail outlets. Though the partners' plans to take the company retail hadn't been finalized, Melvin Kafka decided he was ready to step aside and retire. Selling his half of the burgeoning company to his partner, Holt then charged full-speed ahead with changing empire.
By 1960, Walden's leased book departments numbered 150 throughout the United States, in addition to its hundreds of rental libraries. Two years later, the company went forward with its retail plans and opened its first "Waldenbooks" store in the Northway Mall in Pittsburgh, Pennsylvania. The company name, incidentally, was Hoyt's respectful nod to Henry David Thoreau, as Hoyt was born and raised near Walden Pond in Massachusetts. Hoyt had no idea just how widespread the Waldenbooks name would become in the coming decades. The flagship Waldenbooks turned out to be a significant departure for Hoyt and the company in two ways. First, focus was on selling rather than renting or loaning books, and second, the outlet was located in a suburban area mall, signalling a move away from the downtown shopping districts which had always been Walden's bread and butter. By 1969 Waldenbooks had opened 53 retail stores and maintained 71 leased outlets in major departments stores, bringing in sales of $4.4 million. The company's phenomenal success brought the attention of larger companies, and Walden was acquired by Carter Hawley Hale (CHH), a retail conglomerate based in Los Angeles. Following in his father's footsteps, Russell L. Hoyt became CEO, while Hoyt Sr. maintained his role as chairman of the board.
Rapid Expansion in the 1970s
The 1970s were a time of extraordinary growth for Waldenbooks, with new stores opening around the country at the rate of one per week. By 1974, the company had outgrown its corporate offices on Ludlow street and began looking for a more suitable location in Stamford. The next year, Russell L. Hoyt stepped down as CEO and was replaced by Arthur Coons, an executive with parent company Carter Hawley Hale. Still looking for a new corporate headquarters, Walden set its sights on North Stamford, a mostly residential area. Picking up the option to buy an eight-acre plot on High Ridge Road, the company initiated the purchase in November 1976. Yet this proved a Herculean task, complicated by strict zoning laws which allowed for few area businesses and none above a point called Bull's Head, where the desired land tract was located. In the meantime, Waldenbooks had opened its 500th store in 1978. The Bull's Head zoning war between Walden and the city of Stamford was finally settled after more than a year, and in March, the company triumphantly broke ground on High Ridge Road. Forty-five years after its founding, construction began on Walden's new 63,000-square-foot, two-and-a-half story corporate headquarters at 201 High Ridge Road, which became home to the company's 275 employees.
January 1979 marked a changing of the guard at Waldenbooks, as Harry T. Hoffman, formerly president at the Ingram Book Company, was named president. On the 29th of that month, the company moved into its spacious new headquarters in North Stamford. With stores in 44 states, Waldenbooks had become a force to be reckoned with in the bookselling industry. In 1980 alone, a stunning 90 new bookstores were opened and a new face appeared around the home office as Charles Cumello joined the company as a vice-president, controller, and, some believed, heir apparent to Harry Hoffman. The opening of a new store in Burlington, Vermont, the following year brought Waldenbooks its 735th store, and two other significant milestones, first, as the only national bookseller with stores in every U.S. state, and second, the industry's first centralized warehouse linked by a computerized cash register system to each of Waldenbook's retail outlets for ease in inventory control, ordering and sales reporting.
A New Parent in the 1980s
Celebrating its 50th anniversary in 1983, Walden was operating 830 stores nationwide and was continuing to thrive. However, during this heady time of corporate takeovers, Walden became once again drawn into the leveraged buyout fray. When its parent company, Carter Hawley Hale was pursued by another retail giant, The Limited, Inc., General Cinemas expressed an interest in Waldenbooks, making the CHH takeover less attractive to The Limited, Inc. Then General Cinemas pulled out and sold its option for Waldenbooks to Kmart, which made an offer of $295 million for the company's 845 bookstores in July 1983. In turn, Waldenbooks then made a purchase of its own, buying three New York-based Brentano's bookstores, which sold literary classics and related gift items.
Under the parentage of Kmart, Waldenbooks continued to expand. After years of limited, proprietary publishing from the marketing department, the company officially established its own imprint, Longmeadow Press, in 1984. Moreover, the first Waldenbooks & More outlet opened in 1985 along with the launch of a new full-service "mini-bookstore" called Reader's Market within Kmart stores. The 1,000th Waldenbooks store was opened in 1986, the year the company purchased Washington, D.C.'s historic Globe Bookstore. The following year, Waldenbooks acquired the Canadian chain of Cole's bookstores and also introduced "Waldensoftware" and "Waldenkids" retail outlets. By 1989, the company's home office could no longer house its ever-growing occupants. Complete renovation and construction of a 120,000-square-foot addition to the High Ridge Road facility was soon completed, consolidating all 750 employees under one roof.
As Waldenbooks entered its sixth decade, the company was still breaking new ground in the bookselling industry. Not only had Waldenbooks cracked $1 billion in sales, but Hoffman and his managers were clearly looking to the future and intending to dominate it with new retailing innovations. A new motto, "Waldenbooks--Your Guide to Great Reading," was coined, and in March 1990 the company launched its "Preferred Reader" program. The first of its kind, this "frequent buyer club" charged a small annual fee and rewarded patrons with points for every purchase, a ten percent discount on all merchandise, and $5 certificates for every $100 spent. Within months, Waldenbooks had signed up one million members and by the end of the year had approached the five million mark. At nearly the same time, the company had also installed a toll-free book ordering service, direct to its central warehouse in Nashville, Tennessee, making nearly 100,000 titles available to members of the Preferred Reader program for quick delivery. The latter move answered critics who chastised the chain for not carrying a larger variety of titles, particularly more serious literature.
Reorganizing in the 1990s
In 1991, Harry Hoffman retired and, as expected, Charles Cumello was named president and CEO of Waldenbooks. Claiming the company needed to get "back to basics," Cumello immediately set about focusing on books, drastically reducing sidelines such as toys, games, and videos at the company's 1,300 stores. The company also planned to open ten more Brentano's bookstores (not to be confused with the Midwestern Kroch's and Brentano's chain) and unveiled its first true "superstore" in Madison Heights, a suburb of Detroit.
As the superstore concept, in general, became more popular, large department stores anchoring malls lost business, causing mall stores to feel the pinch. Indeed, Waldenbooks found itself in tough times as mall-based stores accounted for only 20 percent of the burgeoning bookselling industry. In response, the company initiated another two firsts in 1992: the debut of its combination Waldenbooks/Waldenkids store, located in North Wales, Pennsylvania; as well as another superstore called Basset Book Shops, which opened in June in Stamford, to be followed by another 18 to 20 stores.
Change of another kind was fast approaching. In October 1992 Waldenbooks' parent company, Kmart, purchased Borders Books & Music, another growing bookstore chain. Though both Waldenbooks and Borders were to be operated as separate divisions of Kmart, overlap was inevitable as Kmart converted the Basset Book Shops into the more recognized and proven Borders Books & Music stores.
To combat stagnant sales in 1993, Waldenbooks began an extensive restructuring plan to close underperforming stores, bolster others, and seek out new opportunities for its combination and superstores. By 1994, Waldenbooks had targeted 187 underperforming stores of its 1,100 for closure. Of these, 74 ended business in 1994, another 45 or so were slated to close in 1995, 27 expected losses and the remainder were examined and believed capable of operating profitably. Despite the company's downsizing, it was still considered a stable "cash cow" in the bookselling industry. In May 1994, Waldenbooks, Borders Books & Music, and Planet Music, Inc. formed their own company called Borders Group, Inc. and became the second largest book retailer in the United States, with more units (though lower sales) than leader Barnes & Noble. In November, Bruce A. Quinnell, chief operating officer and executive vice-president, was promoted to president of Waldenbooks and the company announced it would vacate its long-time home office in Stamford to consolidate headquarters with Borders in Ann Arbor, Michigan, the next year.
In May 1995 Waldenbooks and Borders initiated a very successful public offering of 35.9 million shares for $14.50 each with proceeds going to Kmart Corporation. While its former parent initially retained 13 percent of the new company, the Borders Group announced an agreement in July to purchase the remaining 5.39 million shares held by Kmart; the transaction was completed in August. Through continued belt-tightening and the adoption of Borders' advanced computerized sales and order management system, Waldenbooks was poised for a resurgence in the mid-1990s. Sales for 1995 stood at $963.4 million, and Waldenbooks looked forward to a more bountiful year in 1996.
Principal Operating Units: Brentano's, Coopersmith's, Longmeadow Press, Waldenkids, Waldensoftware.
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