Monday, 23 May 2011

The mouse that roared

Everyone who reads the quality press or who knows anything about bookselling will know that Waterstone's, like Chelsea football club, is now owned by the Russkies, and that James Daunt, the owner of an existing six-strong chain of high quality London bookshops has been appointed the CEO of the much bigger chain. He promises to rebuild Waterstone's as a stockholding bookshop - they have been "buying nothing" as some of their staff have said recently - and to build the 296 bookshops as "local bookshops" tailored to local needs. I won't rehash all the coverage. Everyone in publishing has welcomed the change, as has virtually everyone who works for the chain. Meanwhile we wait to see how much money the new owner will put into the business, which Daunt will now review. Previously industry insiders all seemed to agree that whoever took on the chain would have to close about 100 branches. Whether that is true or not is another matter but industry insiders have to say more than "dunno" when asked for comments by the press. Certainly James Daunt has indicated no desire to slash and burn.
BUT - just prior to the sale - the Bookseller reported Waterstone's as wanting to move their standard discount from small independent publishers from 45% to 53%. This would seem to fly in the face of Daunt's plans to have interesting, locally relevant shops if the chain prices independents out. Put crudely, we, and many others could not afford to give Waterstone's 53% discount. The implications of that are obvious.
The £53 million paid, however, divided by the number of shops (296) gives an average value of each shop as £179, 054 each, including stock, fixtures and fittings, the trading name and goodwill. £53 million does seem like a lot of money, but break it down this way and it is obvious that there is little current value in the firm. We wish James Daunt luck.

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