Kevin Ertell, who led last year’s relaunch of Borders.com as an e-commerce site with notable interactive shopping features like its Magic Shelf virtual bookshelf, is leaving the retailer as part of a restructuring of top management announced today by Borders Group Inc. Ertell is being replaced as head of e-commerce by Rich Fahle, a 10-year Borders veteran who most recently was vice president of content.
The restructuring, which eliminates the positions of six vice presidents and 10 directors, comes as the retailer closed out its fiscal year on Jan. 31. For the third quarter ended Nov. 1, the latest period for which it has released financial results, Borders posted a net loss of $175.4 million on revenue of $693.4 million, compared to a year-ago net loss of $161.1 million on revenue of $765.2 million. For the fiscal year to date through Nov. 1, Borders reported a net loss of $216.3 million on revenue of $2.19 billion, compared to a net loss of $222.1 million on revenue of $2.33 billion.
Borders began publicly promoting its new web site last summer and last month reported
$20.3 million in sales at Borders.com for the nine-week holiday shopping period ended Jan. 3. During the same period, the company’s, overall sales fell 11.7% year over year to $868.8 million.
Borders also announced early last month that it was bringing in turn-around specialist Ron Marshall to replace CEO George Jones. Marshall, a veteran retail executive who founded Wildridge Capital Management, had once worked at rival bookseller Barnes & Noble. Jones had joined Borders in 2006 and had given his full support to Ertell and his plans to rebuild Borders.com as an e-commerce site. Until last May, Borders had operated its e-commerce site for several years on the Amazon.com platform.
Marshall said today that the company’s financial challenges had forced major changes. “As we address the immediate priority of getting our company’s financial house in order, one of our goals is to more aggressively reduce annual expenses,” Marshall says. “It is difficult to make the decision to eliminate jobs, especially those of talented and dedicated leaders who have significantly contributed to our organization, yet streamlining our leadership and eliminating management layers will help us be more agile and at the same time advance us toward our expense reduction goals.”
Ertell, a former head of e-commerce at Tower Records, is leaving Borders as it consolidates its online operations, including e-commerce sales and its Borders Media video programming, under Fahle, who will serve as vice president of Borders.com. Fahle originated the Borders Media online video programming and has held several leadership positions since the late 1990s within Borders.com.
Analysts say it will be crucial for Borders to continue the cross-channel retailing strategy promoted by Ertell, including a loyalty program that consumers can use online and in stores, and the ability to search online at in-store kiosks for inventory available in other stores. “Kevin was a big proponent of building cross-channel experiences on top of a solid e-commerce foundation, and I sincerely hope his exit does not mean Borders management is reprioritizing the combined role of online and stores,” says Nikki Baird, managing director at research and advisory firm Retail Systems Research. “For a company selling media these days, getting that right is critical.”
Ertell spoke about Borders’ cross-channel strategy at last month’s Internet Retailer Web Design ’09 Conference in Miami Beach, FL. His presentation is available on a CD-ROM.
In addition to Ertell, those leaving Borders are Ken Armstrong, executive vice president of U.S. stores, whose duties are being absorbed by Steve Davis, senior vice president of Borders Group operations; and Susan Harwood, senior vice president and chief information officer, whose duties are being filled by Dan Smith, a 14-year Borders veteran who one month ago was named chief administrative officer.
Other eliminated positions include the offices of vice president for real estate, human resources and creative departments. Borders did not provide the names of the executives leaving those positions. In addition, Fred Boehler, senior vice president of logistics, has announced he will leave Borders Group. Borders will continue to support all of the functions that had been served by these executives under a consolidated business structure, the company says.
The company is also eliminating 10 director positions in areas including store operations, merchandising and marketing. The company employs about 27,000 people worldwide and operates about 1,100 stores.
Back...
