* CEO Ron Marshall leaves for another retailer
* Merchandising exec Mike Edwards to serve as interim CEO
* Borders shares fall 16 percent in NYSE trade
* Barnes & Noble up 13 pct, report of deal with Apple
* Borders scheduled to repay loan to hedge fund on April 1
(Adds details about biggest investor, stock price, loan)
By Phil Wahba
NEW YORK, Jan 26 (Reuters) - Bookseller Borders Group Inc
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
merchandising teams.
Marshall, who was credited with cutting through layers of
management at the second-largest U.S. bookstore chain by
revenue, left one year after joining the firm and one week
after it reported a drop in revenue during the holiday period.
Shares of Borders, already under fire for a slow response
to the electronic books market, fell 16 percent to close at 92
cents on Tuesday.
"It's a significant red flag, on top of the fact they've
been struggling with liquidity and weak sales," said Michael
Souers, a retail analyst with Standard & Poor's Equity
Research. "Certainly it would help Barnes & Noble to have
instability at their primary rival," Souers said.
Shares of larger bookseller Barnes & Noble Inc
soared more than 13 percent to close at $19.70 on Tuesday.
Souers said Barnes & Noble was also getting a boost from
media reports that referred to an entry on Monday on technology
blog TechCrunch saying that Barnes & Noble had worked with
Apple Corp on its tablet, whose launch is expected on
Wednesday and could have a Barnes & Noble bookstore built in.
Barnes & Noble declined to comment on rumors, while Apple
did not immediately return calls seeking comment.
MARSHALL REPORTEDLY HEADING TO GROCER
Marshall moved to Borders in January 2009 after running the
private equity firm Wildridge Capital Management.
The Wall Street Journal reported that he would be named CEO
of supermarket chain Great Atlantic & Pacific Tea Co ,
citing people familiar with the situation. A spokeswoman for
A&P, whose CEO resigned in October, could not be reached.
Prior to founding Wildridge about four years ago, Marshall
steered turnarounds at food distributor Nash Finch Co and
supermarket operator Pathmark Stores Inc. Pathmark was sold to
A&P in December 2007.
Borders Chief Merchandising Officer Michael Edwards, 49,
who joined the struggling bookseller in September and is
well-liked according to company insiders, will serve as interim
CEO and report to Chairman Mick McGuire while Borders searches
for a permanent replacement.
Edwards 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 acquisition of lucy in 2007.
WEAK SALES
Marshall was brought in last year 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.
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, retailer did not find a buyer.
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.
Ackman, whose hedge fund has invested in the bookseller
since 2006, could not be reached at his New York office for
comment.
Pershing Square made a $42.5 million senior secured loan,
which carries a 9.8 percent interest rate, to Borders which has
to be paid back on April 1.
Bookstores have struggled as more sales move online to
retailers such as Amazon.com Inc .
Borders, the No. 2 U.S. bookstore chain behind Barnes &
Noble, has been slammed by investors and analysts 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 spin-off of Canadian
bookseller Indigo Books & Music Inc .
Borders hired Korn/Ferry International to head the search
for a new CEO.
(Reporting by Phil Wahba, additional reporting by Svea
Herbst-Bayliss in Boston and by Gabriel Madway in San
Francisco; Editing by Maureen Bavdek, John Wallace and Matthew
Lewis)
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