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Posts Tagged ‘Costco’

Analyst Calls for Borders/B&N Merger

The Associated Press reports on an investors note sent out yesterday by Credit Suisse analyst Gary Balter that had share prices rising and people speculating. That’s because Balter suggested that bookseller Barnes & Noble should consider acquiring rival Borders. “Book retailing is an industry with very little if any growth as the Internet becomes the first source to answer most questions and offers books for lower prices,” he wrote. “Coupled with wholesalers such as Costco receiving better buying terms than the retailers, we believe a Barnes & Noble for Borders transaction would be approved and could create substantial back office synergies.”

Borders shares rose 65 cents, or 3 percent, to $22.56. The stock has traded between $16.20 and $24.19 in the past 52 weeks. Barnes & Noble shares rose 16 cents to $40.44, and neither piece of news is surprising as stock prices shift with any new bit of information. From a competition standpoint, a merger between the two major bookstore chains seems rather disastrous for publishers and authors as the fortunes of non-bestselling authors could be plunged even further into dire territory. For the chains, though, it might be a different story – especially if a merger prevents one, or both companies from dying on the vine, which is all too possible sooner than we think.

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Exact Sales Figures: The Needle/Haystack Conundrum

As part of its continuing coverage of the Clive Cussler/Philip Anschutz lawsuit (more on that below) the LA Times delves into one of the key points of the lawsuit – did Cussler grossly overinflate his sales figures – and fans back into the publishing industry’s general cluelessness vagueness of exact sales figures. Finding data about book sales got easier in 2001, writes Josh Getlin, when Nielsen BookScan, a New York-based firm, began compiling information that measured about 70% of the U.S. book market. Yet there is still confusion in the marketplace. BookScan records sales from major chain stores, a sampling of independent sellers, online firms like Amazon.com, plus Costco, Kmart, Target and Starbucks. But it does not track weekly sales from Wal-Mart, religious stores, gift shops, grocers, drugstores and other outlets.

Meanwhile, publishers routinely withhold full sales figures, saying the information is proprietary. The only people legally entitled to know those numbers are authors and their agents. “The publishing business has never gone out of its way to report actual sales numbers because it has no real interest in doing so,” said Albert Greco, a Fordham University economist who analyzes business trends in the book world. “It’s hard to know what’s real. If an author on TV talk says his book has sold 1 million copies, only a few people will know if that’s true.” Especially when announced print runs are about twice the number of actual books printed, the despair of returns at full price and the small number of readers as compared to other forms of media.

“Most books don’t have anywhere near the financial success of movies, even unsuccessful movies,” said Cathy Langer, chief buyer for the Tattered Cover Bookstore in Denver. “So if you look at sales figures, it’s not a pretty picture. And when you get so obsessed with numbers, you lose the wonder and creativity that’s basic to the book business.”

Today in AMS: PGW’s Official Statement; Publishers Unite to Fight

Yesterday afternoon Publishers Group West President Rich Freese sent out a statement to all PGW publishers outlining the distributor’s position in the wake of Advanced Marketing Services‘ Chapter 11 bankruptcy filing, and what it means for the future of its more than 150 publisher clients. The most important points of the statement:

  • PGW filed a motion on January 5 filed with the court seeking approval to give PGW publishers “Critical Vendor” status and have asked the court to allow PGW to make payments totaling the amounts due from PGW to PGW publishers in January 2007. “We believe that Critical Vendor designation is a significant step for PGW publishers and expect this motion to come before the court during a hearing on January 24th,” says Freese.
  • Contradicting statements in the media and the blogosphere, “PGW publishers are the owners of their inventory held by PGW in its warehouses in accordance with our contractual relationships.
  • Finally, Freese wants “to reiterate that neither AMS nor PGW have ever pledged the PGW publishers’ inventory held in PGW’s warehouses against our credit line. Accordingly, the bank excludes the PGW publishers’ inventory from its calculations against the borrowing base.”

More updates are pending, as are weekly COD checks to each publisher post-petition.

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A Brief, Somewhat Turbulent History of AMS

As the Advanced Marketing Services Chapter 11 Filing takes more twists and turns (many of them appear in a post below) it’s helpful to turn the clock back a few years and go through the accounting scandals, fraudulent claims, federal investigations, criminal charges, civil actions, guilty pleas and resignations that have dogged AMS for years – and are almost certainly the strongest mitigating factors leading to their bankruptcy filing. What emerges is a story of a company that preferred self-aggrandizement to truth, bold claims instead of realistic expectations and a ship that started sinking years ago until the wreckage became so decimated that the only real recourse, especially for suddenly-struggling independent publishers, is to splinter and start over.

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Further AMS Bankruptcy Updates

The New York Times finally picks up the Advanced Marketing Services bankruptcy story (what took so long?) and provides an overview of why this is big news in the publishing industry. “This is a huge disruption in this business,” said a publishing executive to Julie Bosman, who declined to be further identified because he was not authorized to speak for his company. “The publishers are going to end up taking a big loss.”

But Shelf Awareness reports some good news on the PGW front. Yesterday the distributor indicated that key accounts, including Amazon, Ingram, Barnes & Noble, Baker & Taylor , Bookazine, Books-A-Million, Borders, Costco and “myriad indies,” have expressed their support and will “treat their ordering and return patterns as business as usual.” In addition, PGW president Rich Freese wrote to publishers saying that the AMS bankruptcy court had approved payments to publishers for books that shipped or will ship on or after December 29. Checks for gross sales for the first week after December 29 should go out next Monday. PGW will send checks on a weekly basis for the time being.

The biggest irony of the AMS bankruptcy? PGW had a great 2006 as ynit sales rose 3% to 11.2 million, gross sales grew 2.2% to $187.3 million, net sales were up 5.5% to $138.6 million, and returns dropped 6.1% to slightly under 26%. “Last Thursday, PGW was having its best year ever. Now it’s teetering on the edge,” said one disbelieving publisher.

AMS Bankruptcy: Loan Approved, Costco gives okay

As Advanced Marketing Services‘ bankruptcy woes continue to send the publishing industry into a tizzy, interim measures are now in place, the San Diego Union-Tribune reports, thanks to approval by Bankruptcy Court Judge Christopher Sontchi for up to $75 million in loans the company said it needs to operate while in bankruptcy. Good news also came by way of Costco, one of AMS’s largest distribution customers, who told publishers that supply books to AMS should continue to do so. A Costco spokesperson told PW Daily‘s Jim Milliot that until further notice, publishers should operate “on a business as usual basis.” Costco, the spokesperson added, is monitoring events “on a day-to-day basis.” Most of the larger publishers that supply AMS indicated they will continue to do so, but on a COD basis.

Though AMS’s Chapter 11 filing is only for its US holdings, the Bookseller reports that UK publishers are eyeing the bankruptcy filing nervously, despite assurances that AMS’s UK operations will remain unaffected. “There are no changes in our operations, we are free to conduct business as normal and our suppliers are unaffected,” said Gareth Powell, managing director of UK distribution company Advanced Marketing, an AMS subsidiary. But one publisher added: “My understanding is that the UK is affected and we will lose money on UK sales-we are waiting to hear.”