News

« Headlines

Ottakar's helps kick-start Waterstone's

28.06.07 Philip Jones

The purchase of Ottakar's has helped spark the first signs of a recovery at Waterstone's, with HMV c.e.o. Simon Fox telling analysts that the rebranded former Ottakar's branches have been outperforming Waterstone's own stores.

Results put out today, showed that the enlarged business recorded a 0.6% rise in like-for-like sales for the period after its financial year-end to 23rd June thanks to an "improved market". Despite this analysts spoken to by The Bookseller said it was too early to talk of a turnround.

The retailer has been boosted by the inclusion of Ottakar's in its like-for-like figures for the first time, benefiting from comparisons with a period immediately before it acquired the rival chain. A spokesman for HMV said the accounting change had been introduced in order to be "more helpful", but one analyst described it as an "unusual" step.

Ottakar's contributed £138.8m of additional sales to the group in the year to 28th April, leaving Waterstone's with sales of £398.7m, a drop of £20m year-on-year. The results are in line with the trading update put out in May, when HMV said that Waterstone's sales would be down 4.7% (not including Ottakar's).

Nevertheless, the positive sales figure is the retailer's first hint of real growth under managing director Gerry Johnson. Johnson told The Bookseller: "It is still early days but we are pleased with our performance and we should all feel reassured by the improved book market."

Fox, who also reported that HMV's like-for-like sales were up by 8.8%, admitted that the like-for-like comparison was "against softer comparables from a year ago when trading was adversely impacted by the World Cup". Prior to its purchase by HMV, Ottakar's was haemorraghing sales, with like-for-like sales down 8% in the sixteen weeks to 20 May 2006.

Analysts were skeptical about turnaround talk. Nick Bubb from Pali International said: "I think Waterstone's results are quite poor. The £16.3m operating profit is a disappointing figure - it would have been interesting to see what that profit would have been if they hadn't bought Ottakar's. I wouldn't be shouting about the results representing a turnround." He said the retailer was "benefiting from better trading conditions of late", and was "bullish" about the children's market. "It is an area that a good high street retailer could carve out a niche."

Another analyst said Waterstone's had enjoyed the "bounce" in the high street, and was benefiting from a comparison with an extremely poor period at Ottakar's one year ago.

HMV's share price has dropped back by 2.5pence in trading today.

Todays Picks Philip Jones waterstone's gerry johnson Simon Fox Ottakar's

See Also