News

HMV Group makes Waterstone's pledge

07.03.11 | Lisa Campbell

HMV Group has moved to reassure publishers of Waterstone's future, revealing the bookseller is on track to achieve its predicted 2%–3% operating margin by the end of its financial year.

Tuesday's [1st March] trading statement by the HMV Group revealed it expected to breach a key bank covenant test in April and that net debt would be at least £130m.

HMV says full-year profits will be below the expected £45m, meanwhile analyst Nick Bubb from Arden Partners revealed his forecast was now £39m. He predicted profit before tax "may well worsen and halve again" in 2011/12. It is thought the debt is a result of the changes in product mix towards newer technology and a deterioration in trading.

However, an HMV Group spokesman said Waterstone's was on track to achieve its 2%–3% operating margin by the end of its financial year on 30th April thanks to "the turnaround initiative of the past 12 months implemented by [managing director] Dominic Myers". While the group says banking facilities remain available and lenders remain supportive, shares in the HMV Group fell this morning to 14.25p.

Waterstone's declined to comment on The Bookseller's understanding that it has approached publishers for an additional discount on stock. However, publishing heads including Bloomsbury's Nigel Newton have come out in support of the retailer, with John Makinson, Penguin Group c.e.o. saying "we are trying to support them in any way we can".

City analysts again raised suggestions Waterstone's will be sold and HMV Group will try to raise emergency equity to turnaround the business. It was reported last week that Russian tycoon Alexander Mamut, who has a 6.1% stake in HMV, was in talks with HMV Group c.e.o. Simon Fox about buying the bookseller. Mamut is the main shareholder in internet company SUP, which owns blogging site LiveJournal, and is also a major share holder in Moscow-based Atticus Publishing.

Speaking to The Bookseller, Arkady Vitrouk, c.e.o. of Atticus, said: "Alexander is quite a private person. He loves books, and therefore he is interested in growing the company, and has many ideas. He is very well educated and sold books when they were in short supply in the Soviet Union."

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By JULIAN RIVERS

I think the turnaround initiative is reduction in stocks and improvements in buying margin where possible.

Mon, 07/03/2011 - 11:04
By Anonymous

I visited a Waterstones branch on Saturday and while browsing had one assistant come up to me and ask how I was and could he help. Oh, how I was tempted to say "Pi55ed off" and "No" which was the truth but I just smiled politely and let him wander off to pester someone else.
At the counter, while paying for a book, I was prompted to buy some other item that was sitting by the till.

It would seem that a directive has gone out to pump customers as much as possible but I couldn't get out of there fast enough.

Mon, 07/03/2011 - 11:52
By COMMENTATOR

The staff are doing what is being asked of them , which is the right thing....sell more books

Mon, 07/03/2011 - 12:11
By JULIAN RIVERS

Only in the book industry can anybody complain about an assistant asking if the customer wants any help. The reason Dillons outsold Waterstones [£ to retail sq ft] was because it insisted that staff were there to sell books rather than having their heads down ordering them on the shop floor . Its just adopting modern retailing sales practice and Waterstones are no exception to that if they share the same High Street on the same rents as more aggressive retailers . Good on them .

Mon, 07/03/2011 - 12:21
By JULIAN RIVERS

The post to which I was referring has gone for some reason , thus making my last posting even more nonsensical than usual .

Mon, 07/03/2011 - 12:32
By Darran

How awful for you anonymous. How dare this insolent bookseller ask you how you are and how he could help. I hope you wrote a letter of complaint.

Mon, 07/03/2011 - 12:44
By minime

"the turnaround initiative of the past 12 months implemented by [managing director] Dominic Myers"

this is just figures on paper, i thought the initiative was to improve range and return to book knowledge, alot of the shops have very low stock with the usual suspects face out, and large tables of random tat (soft toys, chocolate, oven gloves?)this might boost the margin figures short term but it detracts from the notion that waterstones is the last dedicated bookshop on the high street.

Mon, 07/03/2011 - 13:04
By Oh, thank God

I saw the headline and thought it was 'Spring Into Shape' time again...

Mon, 07/03/2011 - 15:28
By Gauleiter

"HMV Group makes Waterstone's pledge". What an amazing headline must rank with "It is the last territorial claim which I have to make in Europe" (now I've got the Sudetenland) and "I'll never, ever drink another drop" (if you'll only buy my records) or even Eric Gill's famoust diary entry "must stop....." (well........until my perverted desires arise again). The publishers, staff and customers should take this assurance as what it is 'smoke and mirrors'.

Mon, 07/03/2011 - 17:29
By Hello Autumn Friends

Let's hope it makes the current pay freeze, stores being closed, not being able to order anything etc all worth while. Becuase having the Hub was to make supply and stock great in stores. Thats why a lot of people were made redundant and lost hours. Sorry, booksellers, because management were exempt.

Mon, 07/03/2011 - 22:09
By Single x

I think Christmas destroyed any illusion that management are keeping to their previous promises of range development and building up the idea of a proper 'last-man-standing' bookselling chain. It's about selling, selling whatever you can, and to whoever you can, whilst you still can. That means oven gloves, chocolates, mugs, seeds, golf 'pods' and so on.

Mon, 07/03/2011 - 23:46
By Doom

HMV shares now below 15p

Mon, 07/03/2011 - 23:54
By mavis_rimmel

Imagine my surprise when I popped in to buy the latest Elizabeth George at a knockdown price and was asked if I would like oven gloves with my purchase. What next one wonders - a fish supper?

Tue, 08/03/2011 - 07:43
By Anonymous

When any retailer starts trying to flog Tat in there stores.... It is a sign that the end for the bussines is near

Tue, 08/03/2011 - 09:43
By Charlie Sheen

What Waterstone's needs, brothers, is some Tiger Blood!
Winning! I invented bookselling! I wrote poetry that blew the minds off of the squares, trolls and ne'er-do-wells. You can take that to the bank, baby. I am talking to my lawyers about buying this little chain of bookstores and renaming them 'Tiger Blood Bookstores'. The future is bright, brothers, the future is Sheen!

Tue, 08/03/2011 - 11:15
By David J Hanks

What?

Tue, 08/03/2011 - 11:17
By Ladypunk

This would seem better coming from someone who could actually form a sentence...

Tue, 08/03/2011 - 11:34
By JKRowlinginit

You get a fish supper with the new Rick Stein.
Elizabeth George is hot, didn't you know that?

Tue, 08/03/2011 - 12:27
By Anonymous

Julian Rivers has it exactly the wrong way around re the relative sales psf of Waterstone's and Dillons (March 07 above). I have the accounts in front of me. In 1996 Waterstone's sales psf were £307 and Dillons £281. In 1997 Waterstone's sales psf were £316 and Dillons £295. In 1998 Waterstone's achieved £333 and Dillons £310. Waterstone's then acquired Dillons. QED.....

Tue, 08/03/2011 - 13:47
By baffled

good job Waterstones don't hire and fire based upon grammatical ability from what i see here. Good lord.

Tue, 08/03/2011 - 15:52

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