Mike Edwards

The country's second-largest book retailer had been counting on a Christmas miracle to rescue it from deep financial doldrums. But the holiday season played Scrooge instead. Now, confronting a liquidity shortfall, a bankruptcy seems more likely than ever.

The country's second-largest bookstore widened its third-quarter loss to nearly double that of a year ago. Even worse, the estimated value of its inventory has declined, making it harder for Borders to borrow money. Will the company find a way to transform itself?

Borders, the nation's second-largest bookstore chain, has struggled for years due to competition from both fellow bricks-and-mortar outlets and online booksellers. It's latest move to combat that is an offer to match the competition's prices -- but the program's limits doom it failure.

Borders, the nation's second-largest book retailer, is trying a new tactic to gain a much-needed sales boost heading into the end of year shopping season: It's opening 25 "pop-up" shops meant to last only for the holidays, the company announced Tuesday.

For the quarter ending July 31, overall sales dropped 11.5% from a year ago to $526 million, continuing a downward spiral that's seen revenues over this time decline year-on-year from $945 million in 2007 to $749 million in 2008 to $617 million in 2009.

Faced with tumbling book sales, Borders, the country's second largest bookstore chain, will begin selling stuffed animal kits from Build-A-Bear Workshop in its stores. It also plans to cut prices of its e-reading devices.

Struggling book retailer Borders announced in a statement Thursday that Chairman Bennett LeBow adds the title of CEO, Borders Group, while Mike Edwards, who was the interim company head since January, gets a permanent job -- sort of.

Borders Group CEO Ron Marshall is leaving the company to become CEO of the supermarket chain A&P. Marshall is leaving Borders after less than a year at the bookseller, which just posted poor holiday earnings and is facing substantial layoffs.