Bad Times at Borders

continued

The bottom line: while Borders lost more than $300 million in the past two years, B&N earned $285 million. Reflecting the economic downturn, B&N’s stock price has fallen by about a third since last summer. Even so, stockholders still value it at a relatively robust $1.4 billion. Borders’s value, in stark contrast, has slumped to just $338 million. Can a company with 1,000 locations, half of them superstores, really be worth so little?

The man charged with finding a future for Borders has a retail career spanning thirty years and a half dozen companies.

George Jones worked for Target in the 1980s, where he helped focus its strategy on fashion and a positive shopping experience to compete against Wal-Mart and Kmart. From 1991 to 1994 he was president of Roses Stores, a troubled general-merchandise chain in the Southeast. Roses ended up in Chapter 11, closing more than 100 stores before it returned to profitability. From there Jones joined Warner Bros., where he oversaw licensing deals and 150 Warner Bros. Studio Stores. Those stores closed in 2001, just as Jones left the company to join Saks, a luxury chain that was struggling with keen competition and declining profitability.

Jones earned a salary of $950,000 as president of the Saks Department Stores division, but left in 2005 after being moved out of the number-two job at its parent company. Recruiters Korn/Ferry International brought him to Borders Group the following summer. Borders hired him as chairman and CEO at $775,000 a year, sweetening the pay cut with options to buy 400,000 shares of stock.