Bad Times at Borders

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But Jones adds that he knew coming in that the company needed to overhaul both its stores and its financials. “I arrived in July 2006,” he says. “For five or six years prior to that, the company had lost market share and performance was declining.” That period coincides closely with the tenure of former CEO Greg Josefowicz—the company’s first CEO who hadn’t been hired by the Borders brothers themselves.

Tom and Louis Borders opened their first small store upstairs on State Street in 1971, and quickly grew it into one of the largest single stores in the country. Shoppers drawn in by discounted best-sellers were lured to linger, sometimes for hours, by a vast array of books and a deeply knowledgeable staff (employees had to pass a test on literature and books). Behind the scenes, Louis’s pioneering computerized inventory system made it surprisingly profitable.

Borders helped turn Ann Arbor into a destination for book buyers, but the brothers had bigger plans. In 1985 they opened a second Borders in Oakland County. Like the original Ann Arbor location, the new store had handsome wood display cases, tables, and quiet corners with benches and chairs and readers tucked in them. Confounding skeptics who assumed that suburbanites had no interest in books, it surpassed the Ann Arbor store’s sales within three years.

By then there were five Borders stores around the country, and the brothers had hired former Hickory Farms exec Bob DiRomualdo to build a national chain. There were more than twenty by 1992—the year the brothers sold out to Kmart for $157 million in stock.