Borders CEO Ron Marshall Resigns

NEW YORK — Borders Group Inc., the No. 2 traditional U.S. bookseller, said Tuesday its CEO Ron Marshall is leaving after about a year with the company to accept the CEO post at another retailer Borders didn't name.

Marshall's departure leaves Borders scrambling to find its fourth CEO in five years and follows a disappointing holiday season and three straight quarterly losses.

Borders named Marshall as CEO and president last January to replace George Jones. Marshall, founder of private equity firm Wildridge Capital Management, was hired for his turnaround skills, having been involved in other turnaround projects as CEO of food distributor and retailer Nash Finch Co. and as chief financial officer of Pathmark Stores Inc., now a unit of the Great Atlantic & Pacific Tea Co.

Marshall struggled to make a mark with Borders, said Michael Norris, senior trade analyst at Simba Information.

"Ron never answered the question that I had since he took over year ago, 'Why should I shop at Borders?' " Norris said. "Improving the cash flow by itself doesn't do much to improve customer flow."

The choice of a new CEO "needs to make the Borders brand really mean something," Norris said. "You have to give consumers a compelling reason to go to the stores when consumers can literally pull out a smart phone and access any content they want."

Borders said its working with a Korn/Ferry International to find a permanent replacement.

In the meantime, Chief Merchandising Officer Michael Edwards, 49, will serve as interim CEO. Edwards joined Borders in September and will report to Chairman Mick McGuire. Marshall is expected to with the transition.

Norris said Edwards is a good choice in the interim.

"You're going from a guy who ate spreadsheets for breakfast, lunch and dinner to someone well versed in creating branding initiatives," he said.

Borders has struggled with increased competition from online rivals and discounters, declining music sales, and consumers curtailing their spending during the recession. Borders reported last week that sales at its namesake superstores open at least a year were down 14.6 percent for the crucial holiday period.

The company last month announced its entry into the electronic book market with Canada's Kobo Inc., but that announcement seemed belated after chief rival Barnes & Noble announced its own dedicated e-reader, the Nook, earlier this year. Amazon.com's Kindle has dominated the e-reader market.

Borders has cut jobs and shuttered stores to boost its finances while also shifting its focus from less-profitable categories such as music in order to concentrate more on children's books, toys, stationery and its cafe.

The chain announced in November that it would close 200 Waldenbooks and Borders Express stores and cut 1,500 jobs this month in order to become more profitable.

Borders, based in Ann Arbor, Mich., runs Waldenbooks and its namesake stores.

Shares fell 17 cents, or 16 percent, to 92 cents.

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AP Retail Writer Michelle Chapman contributed to this report from New York.

Comments

[newsdudeATL]

10:53 PM on 02/11/2010

I work at Borders, so why I am just now hearing about this?

I think it's time for me to skedaddle...

[Groomy Hayes]

07:45 AM on 02/11/2010

General Managers that questioned company directives or came up with their own strategies were ignored, pushed out, or fired. The corporate office was not open to ideas from the stores themselves, and sent conflicting directives to the stores. For the sake of the employees still left who have worthless stock options, no 401k matching, increasing insurance costs, less staff with more work, and their pay increases frozen, I hope the next CEO can "turn Borders around," (Marshall's claim when he came on) but it seems to me that it has already been turned around so many times it doesn't know which way it is facing. The real winners are Ann Arbor Plastics, Advance Print & Graphics, Insight Merchandising, JD Equipment, and all the other companies that profit every time Borders changes its marketing and merchandising strategy. And, of course, Starbucks, which gets to force the stores to overstaff SBC and over order on product that never sells under the guise of "fully merchandising". Borders should get back to selling books (instead of mounds of tacky toys and office supplies) and supporting the people who sell them - in the stores - the booksellers. I no longer receive Borders' proxy statements, but I imagine that, just like the CEOs and VPs that preceded him, Marshall left laughing (with his golden parachute) all the way to the bank. For the second largest bookstore chain in the US to treat it's employees so poorly is shameful. And there are more cuts to come.

[Groomy Hayes]

07:44 AM on 02/11/2010

I worked for Borders 12 years and have been in the bookselling business for over 20, much of the time as a manager, and was and am a regular reader of PW. Marshall's leaving does not surprise me. Borders has had heavier losses and slower growth than B&N (and other retailers) in this last quarter, despite Marshall's drastic payroll cuts and layoffs, a new (and poorly devised) merchandising plan, and the "make books" selling strategy. In the time I worked for Borders, I saw the company change from an emphasis on satisfied, quality employees, distinguishing itself from B&N, being involved in the communities they served, and having innovative marketing strategies into a corporate culture that changed every time upper management changed. Reading the proxy statements every year troubled then sickened me as I saw compensation, benefits and staff cut at the store level and executive salaries (and golden parachutes) increase, despite corporate talk about making sacrifices. The blame for their current woes rests with the executives who created the Borders Rewards program that gave away millions, a partnership with Seattle's Best that was very costly and did not bring about any increase in revenue (except to SBC & Starbucks), a broken distribution and inventory system, costly changes in merchandising strategies that had little or no effect on the consumer but that put strains on the stores' staff and expenses, and the failure to quickly create an online presence (which is slow, not user-friendly and lacks support in stores)

[RedNightOwl]

04:49 PM on 01/27/2010

I used to shop at Borders a few times a month for several years. Borders used to have good deals, good coffee, and a nice selection. The last year or so alot of that changed and I stopped shopping there. The last sale of buy 2 books and get the third for free was horrible. They do the same for DVDs and Cds sometimes. To get the free book you end up spending $30-40 dollars on each visit and in this economy I cannot afford that. I am not sure anyone can right now. I have found myself getting better deals at Target than Borders. And i may have to start using Amazon because Borders selection is not great anymore. I miss the old Borders from say two years ago. The 30% coupon are a good deal though when they send them out.

[Mum]

07:24 AM on 01/27/2010

Part I:

One of the main problems with Borders, and many of the people that work at their stories agree, is that the company insists on a company-wide across-the-board bland uniform brand. The stores stock the same things, with very little deference to community preferences. They must be laid out in much the same way, and that layout is, again, not dictated by local preferences or demands, but is implemented by their regional managers. Their system of encoding their books is illogical at times. For example, my store, which is in the midwest, has a section on local culture (as do all their stores). One day I was browsing the section when I came across a book (there were four copies) on Arizona. Thinking I would be helpful, I took the book to an employee and pointed out the error in shelving. It turns out that the price sticker on the back of the book (which price stickers are NOT put onto the books by the individual stores, but are put on at the warehouses) said that the book was to be shelved in the "local" section, regardless of the fact that Arizona is hardly considered local to the customers in Chicago.

[Mum]

07:23 AM on 01/27/2010

Part II:

In addition, some of their sections are woefully inadequate. Interested in a book by a philosopher? Good luck finding one. You can find 50 different editions/translations/versions of the Bible, and displays of books written by the latest celebrity darling. But Plato? Not a chance.

I shop at my local Borders. I take advantage of the coupons and use the cafe to browse through new titles I'm thinking of buying. The people who work there know their books, and they share my aversion to the Christmas clutter that takes over the store for the last two months of every year, as well as the increasing amount of non-book crap that they are forced to display and try to sell. I also shop at independent bookstores and used bookstores (Chicago has some of the best - the Seminary Co-op Powell's, Bookworks, etc.), and occasionally online. But I also like to shop at my nearest local bookstore, which is Borders, in an effort to support a community resource. I would hate to see it close, especially when all Borders really has to do is start thinking about the needs and desires of its customers, on a store by store basis, rather than adhering to its corporate lockstep philosophy.

[OtayPanky]

08:56 PM on 01/26/2010

Borders is a nice place to hang out in, when I want to peruse a bunch of magazines that mostly aren't worth the paper they're printed on. It's worth a trip once a month or so, particularly when the weather is nasty.

It's also a good place to go when I want to check out a book that I'll eventually be buying from amazon, for a helluva lot less.

In our slow growth/no growth post recession America, it's not a strong company. I don't see how they can make it, really. Over the past 52 weeks, the stock has sold between .39 and .3.38 - and right now it's at .92.

Not good.

[SweetGirl2X2L]

07:02 PM on 01/26/2010

I will begin buying my books at Borders the very _instant_ they start matching Amazon's prices.

Otherwise....

[abliss2379]

09:54 AM on 01/27/2010

That is precisely what is going to drive Borders, B&N and especially independent booksellers, out of business.

[raven119]

03:38 PM on 01/26/2010

The only problem with Borders Books is that the people in charge are numbers crunchers, not book people and the people they hire are so underpaid and undertrained that getting competent service is nearly impossible. Here's a thought: jettison the coffee, rolls, candy, cards, games, stuffed animals, dvds and cds; stop renting prime space to publishers who have more contempt for book shoppers than does the management at Borders; and go for depth in stock instead of quantity of books. Get back to the basics of selling books and you might have a chance.

Meanwhile, I'll continue to buy books from my local independent bookstore.

[OtayPanky]

08:59 PM on 01/26/2010

I don't know if the folks at amazon.com - or their many affiliated used-book sellers - are book people. But my experience is that the service is awesome.

[Fabini]

02:32 PM on 01/26/2010

I was just in a nearby, familiar Borders Bookstore a few hours ago. Within feet of the front entrance, the first thing I or anyone saw walking in was a large display of books about Ozzie Osborne. This is pop-culture television fluff of the worst kind. That's the impression Borders gives – lightweight and trivial. There was a time when going to a bookstore was an experience of exploration. That experience cannot be found on the internet. Consumption–consumerism, that experience is all too common.

[kilbilly]

02:27 PM on 01/26/2010

Once my Borders in Norridge, IL started moving the book cases around to make a smaller inventory look big, I suspected trouble. I saw the same happen with Tower records before the end. Borders is a great store and I'd hate to see it go. What, are Americans no longer reading?!
That would explain a lot...

[simarti44]

01:42 PM on 01/26/2010

The store has gone downhill although it was never a great store. Many of the books are mis-categorized and the layout is confusing and changes constantly. They sell more junk than books now. They do send good coupons though.