* CEO Ron Marshall leaves for another retailer
* Merchandising exec Michael Edwards named interim CEO
* Borders shares fall 12.8 percent
* Barnes & Noble stock up 12 percent, report of Apple deal
(Adds analyst comment, Barnes & Noble report; updates share
By Phil Wahba
NEW YORK, Jan 26 Bookseller Borders Group Inc
BGP.N said on Tuesday that Chief Executive Officer Ron
Marshall had resigned to work for another retailer and would be
replaced on an interim basis by the head of its marketing and
Shares of Borders, which is already under fire for its slow
response to the electronic book market, fell nearly 13 percent.
"It's a significant red flag, on top of the fact they've
been struggling with liquidity and weak sales," said Standard &
Poor's Equity Research analyst Michael Souers. "Certainly it
would help Barnes & Noble to have instability at their primary
Larger bookseller Barnes & Noble Inc's shares (BKS.N)
soared more than 12 percent.
Souers said Barnes & Noble was also getting a boost from
media reports citing a Monday entry on technology blog
TechCrunch that said Barnes & Noble had worked with Apple Corp
(AAPL.O) on its tablet. The tablet, whose launch is expected on
Wednesday, could have a Barnes & Noble bookstore built in, the
Barnes & Noble declined to comment on rumors, while Apple
did not immediately return calls.
MARSHALL REPORTEDLY HEADING TO GROCER
Marshall became CEO of Borders in January 2009 after
running private equity firm Wildridge Capital Management. He
was brought in to replace George Jones, who had been CEO since
July 2006, after a dismal 2008 holiday season when comparable
sales at Borders' superstores fell 14.4 percent.
The Wall Street Journal reported that Marshall would become
CEO of supermarket chain Great Atlantic & Pacific Tea Co
GAP.N, citing people familiar with the situation. A
spokeswoman for A&P, whose CEO resigned in October, did not
immediately return calls.
Prior to founding Wildridge about four years ago, Marshall
steered turnarounds at food distributor Nash Finch Co and
supermarket operator Pathmark Stores Inc. A&P bought Pathmark
in December 2007.
Michael Edwards, who joined Borders as chief merchandising
officer in September, will be interim CEO and report to
Chairman Mick McGuire while the company searches for a
permanent replacement for Marshall.
Edwards, 49, was the CEO of Portland, Oregon-based women's
yoga clothing retailer lucy activewear inc for three years
starting in 2004 -- experience Borders cited in naming him
interim CEO. He oversaw VF Corp's (VFC.N) acquisition of lucy
Marshall's departure comes on the heels of another weak
holiday season. Comparable sales at Borders superstores fell
14.6 percent during the 11 weeks ended Jan. 16.
Borders' troubles led it to put itself up for sale in 2008,
but the Ann Arbor, Michigan-based retailer did not find a
It is closing down 182 of its Waldenbooks stores and will
have only 148 of those outlets by early February. Borders
continues to run 515 of its namesake superstores.
Borders' largest shareholder is investor William Ackman's
Pershing Square Capital Management LP, which owned 17.7 percent
of the company as of September, according to Thomson Reuters.
Bookstores have struggled as more sales have moved online
to retailers such as Amazon.com Inc (AMZN.O).
In particular, investors and analysts have slammed Borders,
the No. 2 U.S. bookstore chain behind Barnes & Noble, for
moving too slowly into the electronic books market and missing
out on what is seen as bookselling's largest growth area.
Amazon introduced its popular Kindle electronic reader in
2007, while Barnes & Noble started selling its Nook last fall.
Borders, in contrast, has no plans for its own e-reader,
but expects to open its own e-bookstore by June in partnership
with electronic download service Kobo Inc, a spinoff of
Canadian bookseller Indigo Books & Music Inc (IDG.TO).
Borders hired Korn/Ferry International (KFY.N) to head the
search for a new CEO.
Shares of Borders were down 14 cents, or 12.8 percent, at
95 cents in afternoon trading, while Barnes & Noble rose $2.11,
or 12.1 percent, to $19.49.
(Reporting by Phil Wahba in New York and Gabriel Madway in San
Francisco; Editing by Maureen Bavdek, John Wallace and Lisa Von