The Bookseller.com

2nd December 2008

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Johnson: 'We delivered'

17.01.08 Graeme Neill

Shares in the HMV Group rose by 4% today after its retail chains Waterstone's and HMV reported better than expected Christmas trading figures. The share price, which at one point was up by more than 15%, rose to 105p, after reaching a new 52-week low just yesterday. Both HMV and Waterstone's recorded strong Christmas trading to the surprise of most analysts. Waterstone's m.d. Gerry Johnson attributed the chain's positive sales growth over Christmas to a "clear value message on big titles", strong sales of local interest books and the chain's customer service.

Johnson spoke in depth to The Bookseller after the retailer posted a like-for-like sales increase of 4% for the five weeks to 5 January, with actual growth of 0.5%. The results mark a turaround from last year, when the chain posted a 2% fall in like-for-like sales over a five week trading period. "It went very well, I am really pleased with it," said Johnson. "We have grown our sales, improved our margins and exited Christmas with less stock than we held last year."

When asked why Waterstone's managed to achieve what many other high street retailers couldn't by boosting Christmas sales, Johnson replied: "I think we got the balance just right between delivering a national offer along with giving local bookshops the capacity to do their own thing. We had a clear value message on the big titles. We didn't move prices up and down. "The branches worked hard to promote mid-range and backlist and did it effectively. And you couldn't fail to be impressed by the service our booksellers gave the customer."

Despite 2007's Christmas trading period being characterised by discounting on key titles by Nigella Lawson and Russell Brand, Johnson said Waterstone's discounted less by focusing price cutting on the titles where customers expected a bargain.

Waterstones.com doubled its sales compared to the previous year's Christmas trading. "There are nearly 700,000 registered customers on the website," he said. "But that wasn't the driver behind our growth. It contributed but the high street stores did very well. "It's still a relatively small part of the business. It would rank among our top five stores in terms of performance. But it's an area of big growth and an important part of our offer."

He said that events continued to be successful across the chain with 1,600 events attended by 80,000 people during the Christmas period. The numbers were also healthy for Waterstone's loyalty card, which has achieved its one millionth subscriber since it was launched in September. Although Johnson said it was still "early days" for the scheme.

Waterstone's sales results outstripped figures that are the best representation of high street performance. Nielsen BookScan's General Retail Market reported sales growth of 1.1% for the month of December. Waterstone's figures are just behind the wider Total Consumer Market, which reported a 5% increase for the same period.

Looking ahead to 2008, Johnson said there was still work to be done within the business. The planned reduction of floor space by 10% by 2010 is 60% complete and Johnson said that the refit of former Ottakar's store had been completed.

"We are going into 2008 in a good place," he said. "We delivered what we said we would. We've got a full agenda for the year ahead. It's not going to be any less competitive but we are well placed."

When asked whether the business was in a position to be more aggressive in negotiating terms with publishers, Johnson replied: "I don't think aggression comes into terms. But we are doing the right thing to develop a strong business so publishers will hopefully, as they should, support us on that. It's not just important for Waterstone's but important for the industry as a whole. Increasingly we have got more and more to offer publishers and their writers."

Retail waterstone's gerry johnson HMV Graeme Neill Christmas