Borders files for bankruptcy protection

Bookseller Borders has filed for bankruptcy protection in the United States and unveiled plans to close nearly a third of its stores as it battles falling sales and a rapidly changing market.

The move comes a little over a year after the American group closed its UK business amid increased competition from online retailers and supermarkets.

The long-expected "Chapter 11" filing in the US will give the chain the chance to repair its ailing finances and shrink its business at a time when consumers are increasingly turning to the internet rather than visiting megastores. The bankruptcy could help larger rival Barnes & Noble, which is also struggling, by reducing the number of competing stores.

Morningstar analyst Pete Wahlstrom said: "Barnes & Noble shouldn't be distracted by Borders' bankruptcy. If they let their foot off the gas even for a second, Apple and Amazon will be ready to take the spoils."

Borders, which started out in 1971 as a small chain of bookstores in Michigan, has struggled to adapt to sweeping technological changes. Its inability to attract significant online business and its near-absence from the growing digital book market have made it difficult for the group to keep up with Barnes & Noble and online giant Amazon.

Borders operates 508 namesake superstores as well as a chain of smaller Waldenbooks outlets. The firm said it would close about 30 per cent of its stores in the next few weeks and planned to continue to pay its employees.

Last month, UK-based HMV Group warned that it may have to close hundreds of stores and sell its Waterstone's book chain.