You are viewing your 1 free article this month. Login to read more articles.
Waterstone's managing director Gerry Johnson has said a "subdued book market" was behind sales dropping nearly 3% and profit by almost 40% in the book chain's last financial year. Speaking to The Bookseller after parent HMV Group reported its full-year figures, Johnson said: "The year was characterised by upheaval in the economy. While the book market was more robust than other areas, it wasn't immune. Against this backdrop I am pleased with what we delivered."
As reported at the end of April, sales in the year to 25th April were down 2.8% at Waterstone's, with like-for-like sales down 3.8% or 3% when Harry Potter is taken into consideration: this resulted in full-year sales of £548.3m compared with £564.3m a year earlier. Profits fell £6.3m to £10m.
Parent HMV said the "performance reflected a challenging and highly competitive book market, which contracted by 2% (after adjusting for Harry Potter)". Sales through waterstones.com grew 60%, although its total share of the online market dropped 0.4%.
HMV said the profit drop at the book chain "[reflected] the sales decline, a 10 basis points reduction in gross margin due to the higher mix of online sales, and £2m of book hub start-up costs, partially offset by cost control measures, including bonus savings".
Johnson said that he felt the retailer did a good job maintaining margin and sales. He also said campaigns like New Voices were among its successes along with its loyalty card, which has attracted 2.8m members since it launched two years ago, higher than the initial three year target of 1.5m cardholders.
Johnson refused to comment on any ongoing issues at the hub. The Bookseller revealed earlier this month that the chain has stopped taking prepayments for customer orders. He said "the situation has changed" but refused to reveal what had been changed. He said: "We are at more than 200 stores now. We are adding more stores this week and are just progressing with it." He said he was talking to staff and publishers about any developments.
HMV chairman Robert Swannell added: "Waterstone's has made a robust defence of its leading high street position against the backdrop of a difficult book market this year and is continuing to adapt its business online and to differentiate itself from the competition. As it becomes fully operational, the new book hub is expected to enhance Waterstone's routes to market as well as the overall financial performance of the business."
HMV said its annual group-wide pretax profit totalled £61.3m, up from the £52m reported a year earlier. Its annual profits were also lifted by achieving group-wide cost savings of £16m. Annual revenues rose 4.4% to £1.96bn.