Borders U.K.'s auditors, Ernst & Young, have raised concerns about the retailer's ability to continue trading, according to documents filed at Companies House.
In the directors' report and financial statements for the year to Feb. 2, 2008, the retailer said its losses increased by 36% from £9.9 million ($14.5 million) to £13.5 million ($22.5 million). Turnover marginally increased by 1% from £215 million ($357.7 million) to £218.2 million ($362.9 million).
However, auditor Ernst & Young drew a series of concerns about Borders U.K.'s long-term ability to trade. These included the competitiveness of the high street bookselling trade plus a difficulty in predicting sales performance. A "significant" quarterly rent cost, was also highlighted, that led the majority of the chain's landlords to renegotiate to monthly payments, as well as uncertainty surrounding the continuing support of suppliers and the availability of credit insurance.
Ernst & Young said: "These events and conditions indicate the existence of material uncertainties which may cast doubt about the group's ability to continue as a going concern."
That financial year includes when Borders U.K. was bought by Luke Johnson's Risk Capital Partners in September 2007. Borders U.K. went through a management buyout last month led by CEO Philip Downer, who was unavailable to comment at the time of going to press.