Borders CEO Ron Marshall resigns to accept position at another retailer
Ron Marshall, the chief executive of beleaguered Ann Arbor-based book store chain Borders Group Inc., is resigning to become CEO of another publicly traded retail chain, officials announced this morning.
Borders is naming Michael J. Edwards, 49, the executive vice president and chief merchandising officer, as its third CEO in the last 12 months. Edwards will be the interim CEO for now.
Officials did not immediately reveal where Marshall is headed but said he would assist with the leadership transition. The Wall Street Journal is reporting that Marshall is joining Montvale, N.J.-based Great Atlantic & Pacific Tea Co.
Borders CEO Ron Marshall
The transition comes as Borders, by most accounts, is fighting to stay afloat in the intensely competitive book retailing industry.
Borders' stock (NYSE: BGP) plunged more than 10 percent to $0.98 a share by 10:30 a.m. as investors feared the implications of the leadership transition.
Today marks the first time Borders' shares have dipped below the critical $1 threshold since the stock market's doldrums of April 2009.
That's down 27.9 percent since it stood at $1.36 at Jan. 15 and down about 50 percent since November. The firm's market capitalization - the net worth of the company's stock - now stands in the range of $59 million.
Marshall, who took over for ousted ex-CEO George Jones in January 2009, expressed regret last week over Borders' 13.7 percent sales decline during the crucial holiday shopping season.
“We are disappointed with holiday results and must intensify our
focus on creating and delivering a shopping experience that drives
profitable sales,” Marshall said in a statement last week.
Borders chairman Mick McGuire said in a statement that Marshall's contributions to the company included making "substantial operational and financial improvements that are driving increased cash flow, reducing debt and positioning Borders to pursue new growth opportunities."
Borders spokeswoman Anne Roman declined to make McGuire, Edwards or Marshall available for comment.
Marshall took over Borders in the midst of the global financial crisis as the book store chain teetered on the edge of liquidation.
The risk of immediate liquidation has since receded, although Borders faces long-term problems associated with its debt and sales challenges.
"They had a good person in charge with Marshall in that he untangled some of the financial issues that they were having. But that’s not enough," said Michael Norris, a book industry analyst with Simba Information. "What really needs to be done is somebody needs to be in charge of Borders and make it a compelling place to shop."
The firm's holiday sales fell 13.7 percent compared to the same period in
2008. Its total sales for the
11-week holiday period, which ended Jan. 16, fell to $846.8 million.
Same-store sales at Borders super stores dipped 14.6 percent during the holiday season. Competitor Barnes & Noble, by comparison, experienced a 5 percent drop in same-store sales during the holiday period.
Details about Marshall's exit compensation package were not immediately available, but reports during his hiring in January 2009 said he could receive a payout of up to $4.3 million upon his departure. His 2009 compensation package was $380,177.
One of Marshall's most closely scrutinized moves involved Borders' e-reader strategy. The firm drew criticism from investors and experts for its failure to put together a defined e-reader strategy by the 2009 holiday season.
Instead, Borders announced in December that it would partner with Toronto-based Kobo Inc. to introduce an electronic book application and online store that will allow consumers to download e-books onto a variety of mobile devices.
Borders has about 25,000 employees, including 800 at its headquarters on Phoenix Drive in Ann Arbor's Research Park. The firm has more than 500 super stores and another 130 Waldenbooks stores.
Its third-quarter revenue in 2009 fell 12.7 percent to $595.5 million, compared to the same period in 2008.Contact AnnArbor.com’s Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter.
Comments
groomy hayes
Thu, Feb 11, 2010 : 7:35 a.m.
I worked for Borders for 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 cuts 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 even once created is slow, not user-friendly and lacks serious support in the stores themselves) 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.
Bob
Thu, Feb 4, 2010 : 2:02 p.m.
Ann Arbor will survive without Borders...Hell...they only have 600 employees left and many of them drive from outside A2 to work there....I should know...I used to be one of them....The company's CEO's over the past 6-7 years have been a disgrace and only helped drive the company further into the ground...and in 2010...it's too late for them. buh-bye!
Nicola Rooney
Wed, Jan 27, 2010 : 6:32 a.m.
Ann Arbor will be diminished if Borders does not survive. Anyone who has contributed to their demise by purchasing on-line from Amazon, will in the future, I trust, never be heard to bemoan the lack of a bricks and mortar store where you can actually look at a book before you choose to buy it, or talk to a bookseller who will be able to prevent an unnecessary purchase, or guide you to an even more interesting title that you know nothing about, or meet a author face-to-face and ask questions and gain insights about their book. It may be convenient to have a book drop in via your mailbox, but it's much less interesting and has zero chance of leading to an unexpected discovery of a book you had no idea you would enjoy until you found it in a real bookstore.
dillymay101
Tue, Jan 26, 2010 : 4:11 p.m.
Should read "doesn't take" or "does not take".
dillymay101
Tue, Jan 26, 2010 : 4:07 p.m.
I certainly hope that Ron Marshall won't take his $4 million payout. Borders employees are being laid-off and corporate employees haven't had raises in 2 years. It seems to be poor taste to take a large pay-out from a company that is on the brink of bankruptcy. What is the board doing?!
dillymay101
Tue, Jan 26, 2010 : 3:05 p.m.
If the story reported above is true, I hope that Ron Marshall finds his dignity and doesn't not take the almost $4 million in payout. Employees at Borders (at least corporate) haven't had raises in 2 years and staff will be cut this week. Paying another CEO millions to leave makes as much sense as a CEO taking millions of dollars from a nearly bankrupt company.
Tom Joad
Tue, Jan 26, 2010 : 11:13 a.m.
Borders is through. You would have to be nutz to buy a $30 book at Borders, after finding and paying parking, when you can get it on Amazon for $20 and they ring your front door bell when it's available
Somewhat Concerned
Tue, Jan 26, 2010 : 9:55 a.m.
After rooting for Borders for many years, I now believe it is doomed. Here's why. I buy lots of books at Borders. According to my Quicken log, over $4200 last year (2009). The Borders website is not as good as Amazon's, so recently I used Amazon's site to find two books in a subject area that interests me. I found the books, went to Borders #1 (Liberty St), found the books on the shelves, and asked if Borders would match the Amazon price. The answer (given with great courtesy) was "no" because Borders has a higher cost structure to stock the books. I pointed out that I was not mooching off Borders cost structure, but actually had mooched off Amazon's cost structure to find books I couldn't find on Borders' website. Nevertheless, the answer was "no," so I ordered the books from Amazon - the first time I have given Amazon an order because I have wanted to support Borders. Not only did I save a significant amount of money, the books arrived in two days, and the service was great. Borders managed to drive a good customer to try their mortal competitor. They have lost most of my business. Which successful companies have done that? Most companies do everything they can to get you to try them and remain loyal. Borders, on the one hand, has its loyalty card, and on the other pushed a loyal customer to try a competitor. They won't survive. I will miss them. I will be sorry for the good people in Ann Arbor who lose their jobs. But, Borders is not a charity; it is a business that is entitled to survive only if it provides value to people. It's not Amazon's fault that Borders is doomed. It is Borders' fault that it is doomed. Sad, but true.