Fresh fears were raised today for the future of Waterstones, Britain’s last surviving national book chain, after it revealed it has slumped almost £40 million into the red.
The high street bookseller, which faces intense competition from Amazon, supermarkets and e-readers such as Kindle, admitted a “disappointing sales performance” pushed it into heavy losses last year.
The grim results follow a series of high street failures, with electrical chain Comet, camera store Jessops and Waterstones’ former owner, HMV, going into administration.
But the chain’s new boss, Daunt Books founder James Daunt, insisted Waterstones was being returned to the black after a good Christmas — boosted by bestsellers such as Jamie Oliver’s 15-Minute Meals and Miranda Hart’s autobiography Is it Just Me?
The chain was sold by music chain HMV for £53 million in June 2011 to the Russian billionaire Alexander Mamut, who installed Mr Daunt as managing director. The latest set of accounts, which cover the year to last April, reveal the desperate state of Waterstones’ finances when it was sold.
Sales plummeted 14 per cent to £410.4 million as a result of disruption caused by the takeover, and by “a difficult high street book market, with strong competition from online retailers”.
Pre-tax losses increased from £28.7 million to £37.3 million and six branches were closed.
Mr Daunt admitted to The Bookseller magazine that the results looked “rather unappealing” but insisted they were “a historic document” that did not reflect current healthier trading.
He said the business was in a “truly shocking” state when Mr Mamut bought it, adding: “We have addressed an enormous amount of the neglect and lack of investment that has gone on.” The chain has launched a major investment programme to modernise the shops and signed a deal with Amazon to sell the Kindle and offer its own e-reading service. Mr Daunt said it would take two years to turn the business around.
Philip Jones, editor of The Bookseller, said that with the backing of Mr Mamut, estimated to be about £1.3 billion, Waterstones is “way off being an HMV situation”, but added: “I don’t yet buy into the idea that everything is rosy going forward. Waterstones faces major challenges such as coming up with the investment for the refurbishment, working out which stores are viable and how to run it as a sustainable business in a world that is rapidly changing.”
