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Posts Tagged ‘Ottakar’s’

Waterstone’s Sales Boosted by HP7

HMV Group Plc, the U.K.’s largest music retailer and owner of the Waterstone’s book chain, reported higher revenue on sales of the new Harry Potter novel and as customers bought more DVDs because of wet summer weather, according to Bloomberg. Same-store sales rose 5.8 percent in the 18 weeks ended Sept. 1, excluding a Japanese unit that was sold, Maidenhead, England-based HMV said today. That compares with a 10 percent slide in the 10 weeks through July 1, 2006.

The results were “partly flattered” by Harry Potter, Numis Securities analyst Jose Marco Tobares said today in a note. “HMV is still a business in structural decline.” Total sales gained 12 percent. Revenue increased 2.7 percent at Waterstone’s stores open at least a year and would have been unchanged on the prior year if it weren’t for the novel about the teenage wizard, HMV said. Total Waterstone’s sales climbed 16 percent after the acquisition of Ottakar’s book stores. The chain is now made up of about 300 outlets.

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Union Calls for Waterstone’s Meetinga

Representatives from the Unite union–formerly Amicus/Transport & General–have lined up a meeting with Waterstone’s HR director Wendy Drinkwater to discuss “concerns” regarding the chain’s harmonization of contracts, reports the Bookseller’s Graeme Neill. The changes, which are under consultation, will unify Waterstone’s and Ottakar’s contracts and will also affect a small number of staff still working under other contracts such as Dillons.

Bill McComish, Unite’s Waterstone’s representative, said that “dozens” of staff had been in contact with the union about the new measures, and a delegation from Unite was due to meet Drinkwater this Thursday, though Waterstone’s would not confirm the meeting. Waterstone’s management has stressed that it is offering staff a competitive pay rise, as well as providing opportunities for those who wish to move into management to do so.

Waterstone’s Denies Pay Freeze Is On

The Bookseller’s Grahame Neill reports that thirty members of Waterstone’s staff have approached a retail trade union over concerns that the chain’s harmonization of terms and conditions will result in a pay freeze. Paul Lee, national officer at the Retail Book Association, said that about 30 Waterstone’s staff have contacted the trade union over fears that the potential unification of Waterstone’s and Ottakar’s staff contracts, could result in staff being worse off in real terms.

“Some of the career booksellers who do not wish to become managers will keep what they have,” he said. “However, they are afraid that their pay will be held at that level. The staff will be entitled to a pay review but not a pay rise . . . therefore their pay could go down in real terms.” One Waterstone’s member of staff said: “A wage freeze has been foisted upon the most senior bookselling staff, some of whom will be on the same pay rate for a number of years.” A Waterstone’s spokesperson denied any such freeze was in effect. The company is budgeting for a pay increase,” she said. “There are a small number of individuals who will not get a pay review because of the wider harmonisation. Everyone will be brought in line with them. We believe these existing rates are very competitive.”

Former Ottakar’s CEO Linked to Borders Bid

The Bookseller reports that Ottakar’s founder James Heneage has been linked with a bid for Borders‘ UK superstores, while former Hammicks chief Trevor Goul-Wheeker is believed to be eyeing its Books Etc division. Industry observers have mooted that Heneage could partner with current Borders CEO David Roche to buy out the chain’s 42 UK and Ireland stores. The pair previously worked together on a management buyout of Ottakar’s that was scuppered by a higher bid from Waterstone’s.

No venture capitalist or trade buyer has swooped since Borders US announced a “strategic review” of all its international businesses last month. One source said that the 50m pound price tag being touted was putting off pre-emptive bidders: “The price is a problem—it’s not worth half of that.”

Dateline LBF: New Independent Bookseller Buying Group

At first I was ready to bitch and moan that the Bookseller only made its LBF daily content available in a flash/PDF-style booklet but over the course of the day they are making select pieces available as standalone links, which is good. The top story, penned by Joel Rickett, focuses on a new buying group for independent booksellers headed by former Ottakar’s marketing director Paul Henderson called Leading Edge, originally founded in Australia where it has 175 member bookshops. They are given access to a centralized website with a range of promoted titles, as well as marketing support such as customer catalogs. They can opt to buy the stock via wholesalers or direct from publishers.

“We can give independents an industry voice and a sense of community,” Henderson explained to the Bookseller. “The [Booksellers Association] can’t be solely representative of indies—its role is to be a general trade body. We can champion independents.” he service will begin to gather members in May, offering a free six-month subscription. The full fee is expected to be £130 per month, for access to an initial range of 150 to 200 titles a month at special terms. It pitches itself as a “completely transparent and accountable support group whose success is predicated on being able to provide value to all parties”.

Possibilities for Borders UK Buyout

Sir Richard Branson is considering a 50m pound bid for the Borders books chain in the UK, in what would be a major expansion of his retail operations. According to a report in trade magazine Retail Week, the billionaire tycoon has requested detailed information on the 70-shop chain from Merrill Lynch, the investment bank which is handling the sale.

But Branson faces quite a lot of competition, according to Publishing News. Industry observers believe that David Roche, Border’s CEO on the UK side, will try and mount an MBO for the company following last week’s shock announcement from its parent company that it intended to sell its UK, Australia and New Zealand operations to concentrate on the domestic US market. Speculation increased this week that a breakup of the company is likely too and that former Ottakar’s boss James Heneage may find himself involved, too. One observer said: “David would love to take the company – he’s ambitious and well-regarded, and is probably one of the more capable people to be able to front an MBO. Borders US has to sell it within a time window in order to save face, because they’ve gone so public on it and in order to keep the UK team engaged. If David can get the backing, he might get it at a good price.” Roche himself simply said: “All options are open.”

Observers point out that an MBO will, obviously, require backing. Analyst David Stoddart at Teather & Greenwood said: “I can’t believe that the private equity fraternity hasn’t had a good look at HMV and drawn their own conclusions. They’ll have to make an assessment of the exit price they’re likely to get after three to five years.” Figures of between �50m and �70m are being suggested for the group, with Richard Ratner at Seymour Pierce saying: “I don’t think it will go for very high money and it could be broken up. An MBO is possible. Apart from WHSmith cherry picking, you’ve got to rule Smiths out. Waterstone’s might be interested in the odd store I suppose.”

More on Waterstone’s Woes

The rumors are true: the Guardian reports that <strong>HMV is planning to close up to 30 of its Waterstone’s book shops, give more space to higher margin items and reduce the number of high brow books, as part of an overhaul to restore the fortunes of the struggling business. Details of the restructuring were announced yesterday as HMV issued yet another profits warning, sending its shares almost 16% lower to 128.5p.

The head of Waterstone’s, Gerry Johnson, said there would be more emphasis on novels, cookery and children’s books and less on “academic and humanities” areas, which he said could still be bought online. When Waterstones bought Ottakar’s last year, it faced fierce opposition from authors and publishers who feared that the range of books on sale would fall. But Johnson denied that the chain was being dumbed down, pointing to the current promotion of the relaunched range of Penguin classics. Watersone’s sells almost one-in-two books in the high street. However, City analysts were mostly underwhelmed by the plans, saying they did not go far enough to address the rapid decline in sales of books, CDs and DVDs on the high street.

In the latest profit warning, the company said like-for-like sales in the nine weeks to March 10 were down 3%. Analysts had already cut their forecasts for the current financial year and are now expecting profits of around 50m pounds, compared to 98m pounds last year. The group hopes to save 40m pounds a year from the overhaul.

Outlook Still Gloomy for Waterstone’s

So remember how its merger with Ottakar’s was supposed to pump some much-needed life into the fortunes of Waterstone’s? Well, think again. According to parent company HMV‘s just-released strategy update, trading conditions have
deteriorated further since the Group’s last trading update in January, particularly in our overseas markets and at Waterstone’s. So a new strategic plan has been put in place to drive cost efficiency (aka close up to 20 Waterstone’s outlets) expand its children’s book propositions and revitalize the core business with loyalty cards and a social networking site. No doubt we’re not the only one who finds these moves too little, too late…

OFT Announces Non-Executive Director Appointments

The Office of Fair Trading – which was in the news a whole lot in late 2005 and early 2006 when Waterstone’s merged with Ottakar’sannounced the appointment of three new members – business economist Bronwyn Curtis, former HMV CEO Alan Giles, and economics professor Frederic Jenny – to its Board as Non-Executive Directors and the re-appointment of an existing Non-Executive Director. The appointments will be for different periods in order to facilitate
continuity and succession planning, and will commence on 1 April 2007. The periods of appointment are three years (Mrs Curtis), four years (Mr Giles), and five years (Professor Jenny). In addition to these new appointments, Professor Richard Whish who has been a member of the OFT Board since 2003 has been reappointed by the Secretary of State. The re-appointment is, at his request, for a period of two years from April 1 2007.

UK Bookselling Tidbits