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Posts Tagged ‘WHSmith’

WHSmith Beats Analyst Expectations

Hemscott‘s Rodney Hobson reports that WHSmith‘s very short trading update covering the year to 31 August should offer reassurance to investors. Analysts had been expecting pretax profits to top £60m compared with 40m pounds last time but today’s statement implies that 65m pounds could be achieved. Smith says that in the high street retail business its focus on gross margin gains and tight cost control ‘continues to deliver a solid performance’. The travel retail business, which comprises outlets at railway stations and airports, continues its strong performance and is making good progress. Accordingly, Smith PLC expects the outcome for the year ‘to be towards the top of market expectations.

The actual figures will be issued on October 11.

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More on Waterstone’s Co-Op “Scandal”

Yes, there’s still reaction and fallout from the Times’ story on Waterstone’s co-op practices. Bill Godber, managing director of distributor Turnaround (whose client publishers include Duckworth, Arcadia, No Exit Press and Milo Books) said to Publishing News: “These increases in charges are very distressing for our smaller, independent clients. In recent months it did seem that the playing field had leveled out a little, but it’s difficult to see how any of them will be able to absorb such costs or risk such large sums of money on what, at the end of the day, is something of a gamble. The problem as I see it is that a large number of what we see as interesting, innovative titles that really do contribute something fresh and vital, can easily become marginalized, and choice is the victim. Of course, we all know that the big supermarkets do this sort of thing all the time, but I don’t think you can compare books to tea or toothpaste where brand is all important.”

Publishers have a number of concerns. They talk about a “credibility gap” between what Waterstone’s is charging and what they believe it is able to deliver at Christmas. As one put it: “They are going to have to significantly increase their share of Christmas to justify these costs and the problem is this: Waterstone’s have had two poor Christmases and WHSmith have had two good ones.” To that end, another unnamed publisher added “Waterstone’s is a strong brand, but they haven’t led Christmas for three or four years. They feel they can do it this year and that’s why they’re bullish on the rate card, but they have to convince a lot of publishers.”

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.”

WHSmith eyes Borders Airport Stores

What with Borders‘ recent announcement that it will shutter all of its UK-based shops, <em>the Scotsman reports that WHSmith has its eye on the airport shops even as he market awaits a bid from retail entrepreneur Tim Waterstone for the whole group. City analysts say that although the Office of Fair Trading would block any move for Borders outright from WH Smith, its airport shops are a licence to print money and chief executive Kate Swann will be interested. Nick Bubb, retail analyst at Pali International, said: “WH Smith will definitely be looking at part of it, especially the airport stores and possibly the out-of-town stores. I would be surprised if they are not trawling over it [Borders] this weekend.”

As for Waterstone, he’s in talks with Mothercare to sell his Early Learning Centre toy chain for an estimated 85 million pounds, which might then be used to try buying out Borders – or at least, try something along those lines, even if Seymour Pierce analyst Richard Ratner dismissed the notion as “wishful thinking”.

Well, That’s a Good Reason for Embezzling, I Suppose

The Keswick News & Star had just about the the best headline yesterday: BOSS STOLE TO PAY MUM RENT. The boss in question was Keswick WHSmith manager Steven Hinde, hauled into court after discrepancies were found in the end-of-day closing cash balances between October 2005 and last November. Investigators arrived on November 14 to carry out a manual check of the safe and found a shortfall of more than 1,000 pounds. When confronted, Hinde ‘fessed up that e had taken 300 pounds – in two lump sums of 200 and 100 pounds – to pay his mother for rent and forgot to pay it back due to “stress at work.”

Hinde, who had no previous convictions, was given a 12-month community order and must complete 100 hours of unpaid work. District Judge Gerald Chalk said: “This is beyond the level of a fine because you abused a position of trust.” Hinde must also pay 60 pounds towards prosecution costs.

Analysts Optimistic about WHSmith fortunes

The book retailer’s sales may have tumbled sharply at the end of 2006, but as the Independent reports, the City was unperturbed because of a sharp improvement in profit margins. Seymour Pierce analyst Richard Ratner said the trading statement was “overall much as expected”. He added: “Kate Swann [WHSmith CEO] has done a great job but at some stage she has to get top line moving. Equally, the current performance is a massive indictment on the mismanagement of WH Smith’s retail arm for the last decade or longer.”

Swann said: “In a competitive period on the high street, we continued to deliver our strategy to improve profitability. We increased the pace at which we are rebalancing the mix of our business towards our core categories.” Still, Swann added that the company remained cautious about the outlook for consumer spending. And then there’s the other news that the Telegraph reported, which is that the company is facing attack for its pension plan changes. Some 1,800 staff at the retailer are to lose their generous final salary pension benefits under a proposal made earlier this month, and unions have accused the company of using changes to its pension scheme as a cynical means of cutting costs.

WHSmith Had Itself a Dismal Little Christmas

WHSmith revealed that sales at its 540 High Street shops were down 8% in off almost 10% over a 20-week period as it shifted away from high-selling low-margin CDs and DVDs and tried to get back to its core books and stationery sales. The figures were almost twice as bad as the company’s direct competitors such as Woolworths, where sales fell 4.6%, and far worse than HMV, even though the music retailer had issued a profits warning shortly beforehand.

Chief executive Kate Swann put the blame on a competitive period on the High Street. However, she added: ‘We continue to deliver our strategy to improve profitability.’ She said that profit margins were up by three percentage points. ‘Our profit has doubled. Our plan has never been to grow top-line sales, so to say this is a shocker would be very misleading,’ she said. Which is a nice way of spinning really bad news…

Richard & Judy Select their next Bestsellers

Because of course, as soon as these eight books got their designation as the next picks for Richard & Judy’s Book Club, they begun their beeline towards UK bestsellerdom. Need we remind you that of the top 100 best-selling titles last year, 21 were by authors discussed on the Richard & Judy Book Club? And so, the eight newly anointed books, which premiere on the show beginning January 31 are:

The Interpretation of Murder, Jed Rubenfeld
The Testament of Gideon Mack, James Robertson
Half of a Yellow Sun, Chimamanda Ngozi Adichie
This Book Will Save Your Life, A M Homes
Restless, William Boyd
Love in the Present Tense, Catherine Ryan Hyde
The Girls, Lori Lansens
Semi-Detached, Griff Rhys Jones

Rodney Troubridge, a fiction buyer for Waterstone’s bookshops, told the Independent it was a “fabulous” list. “I think they have got some really challenging books,” he said. Meanwhile, WHSmith plans to give an even greater emphasis to this year’s Richard & Judy Best Read shortlist following its success with the titles last year, reports Publishing News.