DISCUSSION

Borders Looking for a New CEO, Again

January 27, 2010Written by George Anderson

When Ron Marshall replaced George Jones and joined Borders as its CEO last January, some were not keen on the change of management.

David Schick of Stifel Nicolaus & Co. wrote at the time, "We believe such powerful macroeconomic factors are at work that a management change could confuse the key constituents (vendors) and cause incremental friction in the model. Borders has seen too much change in three years, in our view."

Change, however, is in store for Borders again. Mr. Marshall has chosen to leave the chain to join another retailer (reportedly A&P).

Mr. Marshall who came to Borders billing himself as a "turnaround expert" clearly failed to do that at the bookstore chain despite it being "a powerful brand with millions of loyal customers who love to shop in the stores." The chain's same-store sales declined 14.6 percent for the recent holiday period.

Michael Norris, senior trade analyst at Simba Information, told The Associated Press, "Ron never answered the question that I had since he took over year ago, 'Why should I shop at Borders?' 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," Mr. 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' CMO Michael Edwards will serve as interim CEO of the company while it conducts a search for a permanent replacement for Mr. Marshall.

"We have a clear commitment to drive the top line at Borders Group and there will be no interruption of our strategic plans and efforts to focus with great energy and determination on this goal during the transition," said Mr. Edwards in a press release. "I look forward to continuing momentum in this direction while we remain disciplined on the bottom line, where we have made significant progress over the past several months. I am confident this will be a smooth transition and appreciate the continued support of all of our partners and associates."

Mr. Norris sees Mr. Edwards as a positive change from Mr. Marshall.

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

Discussion Question: What is your assessment of Borders at present and what do you expect to happen at the chain with the latest change in leadership? Do you have any recommendations for the new management?

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