January 27, 2010
Are the wheels coming off at Borders?
by Dennis Johnson
Yesterday, a MobyLives story asked, “Is Borders secertly in trouble?” A press release from the company later in the day may have confirmed that, well, yes it is: The release announced that “Ron Marshall has resigned as President, Chief Executive Officer and a Director of the company, effective immediately.” The release says Marshall quit to take a job at another retailer that went unnamed (a Reuters story says he may be going back to the grocery store business), but as Michael Cader pointed out in a post at Publishers Lunch, the company had badly disappointing holiday sales and “we noted that the last time the chain did that poorly they changed chief executives ….” Meanwhile, in any event, Executive Vice President and Chief Merchandising Officer Michael J. Edwards was named Interim CEO.
Amidst the other reports and rumors circulating about the company, it’s a grim development. Marshall had been with the company only a year and, by many insider accounts, and despite still suffering through successive quarterly losses, he had been making real progress at righting the ship.
But as an S&P analyst says in the Reuters story, “It’s a significant red flag, on top of the fact they’ve been struggling with liquidity and weak sales.” And as another analyst puts it in an Associated Press wire story, “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.”
For now, the company announced it had hired Korn/Ferry International to help it find a new CEO, while everyone in the business keeps fingers crossed for fear the already-collapsed state of book retail doesn’t hereby collapse further. Meanwhile the pendulum swings in the inevitable way of American capitalism: stock in Barnes & Noble rose 12.1% after the news broke.
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives