UPDATE 2-Borders replaces CEO, CFO; holiday sales drop

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NEW YORK, Jan 5 (Reuters) - Book retailer Borders Group Inc (BGP.N) shook up its top management, naming a new chief executive and chief financial officer, as it reported a more than 11 percent sales drop for the holiday season.

Borders, whose shares fell nearly 9 percent, said on Monday that CEO George Jones was being replaced by Ron Marshall, a private equity executive with experience turning around ailing companies. Most recently, Marshall was a principal of Wildridge Capital Management, which he founded about three years ago.

Before that, Marshall helped drive turnarounds at Nash Finch Co, a food distributor, and supermarket operator Pathmark Stores Inc.

The appointment is meant to "more aggressively drive a turnaround of the company within today's challenging economy," said the company, which put itself up for sale last year but did not find a buyer.

It since abandoned pursuing a sale, and said in November it was in talks with shareholder Pershing Square Capital Management on an alternative financing transaction.

"Progress has been made by Borders Group over recent quarters within the challenging economy to reduce debt, improve cash flow, cut expenses, enhance inventory productivity and improve margins, but it is imperative that the company more aggressively attack these initiatives to address its long-term future," said Larry Pollack, the chairman of Borders' board of directors.

The company operates more than 1,100 book stores under the Borders and Waldenbooks names, making it the No. 2 U.S. book store operator behind Barnes & Noble Inc (BKS.N).

Jones, 58, was named CEO in July 2006.

The company named Mark Bierley as chief financial officer, replacing Ed Wilhelm, who will stay on for a transition period. Bierley has worked for Borders since 1996 and served most recently as senior vice president of finance.

The company also promoted Dan Smith, a human resources executive, to the new position of chief administrative officer and Anne Kubek, senior vice president of Borders Stores, as executive vice president of merchandising and marketing.

Borders said total sales during the nine-week holiday period ended Jan. 3 were $868.8 million, down 11.7 percent. Sales at its superstores open at least a year fell 14.4 percent.

The company said holiday sales started slow and improved during the latter part of the season.

Borders shares were down 4 cents, or 8.9 percent, at 41 cents on the New York Stock Exchange. (Reporting by Martinne Geller; Editing by Lisa Von Ahn, Dave Zimmerman)