U.S. bookseller Borders Group Inc said on Tuesday that Chief Executive Ron Marshall has resigned and will be replaced on an interim basis by the head of its marketing and merchandising teams.

Shares of Borders, which had already come under fire for its slow response to the electronic books market, fell 11 cents, or 10 percent, to 98 cents in morning trade.

Marshall, who became CEO in January 2009 and previously ran the private equity firm Wildridge Capital Management, left to become CEO of another publicly traded retailer, which Borders declined to name.

The struggling bookseller's chief merchandising officer, Michael Edwards, 49, who joined Borders in September, will serve as interim CEO and report to Chairman Mick McGuire while Borders searches for a permanent replacement for Marshall.

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.

We have a clear commitment to drive the top line at Borders Group and there will be no interruption of our strategic plans and efforts, Edwards said in a statement.

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 January 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 in the process of 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.

FALLING BEHIND

Brick-and-mortar bookstores have struggled as sales of books move further online to retailers such as Amazon.com Inc .

Borders, the No. 2 U.S. specialty bookstore chain behind Barnes & Noble Inc , in particular 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.

Prior to founding Wildridge about four years ago, Marshall steered turnarounds at food distributor Nash Finch Co and supermarket operator Pathmark Stores Inc.

(Reporting by Phil Wahba; Editing by Maureen Bavdek and John Wallace)

Michigan