Waterstone's Has Disappointing 2001
Amanda-Jane Doran -- Publishers Weekly, 8/6/2001
It's been a rocky few weeks for Waterstone's, as it handed over the running of its Internet business to Amazon and released poor full-year results.
The troubled British book chain will cut another 50 jobs as a result of the alliance made by parent company HMV Media and Amazon to have the American e-retailer run the company's selling site. The site will be relaunched in the autumn as a co-branded Web site. The deal allows Waterstone's to maintain a presence on the Net while relieving HMV of further investment in the venture.
As HMV's cost-cutting exercise gathers speed, the company announced poor full-year results. Despite a rise in sales of 12.5%, to £1.5 billion ($2.1 billion), HMV's £9.3-million profit in 2000 has slumped to a loss of £20.1 million in 2001. Restructuring at Waterstone's and group debt contributed to exceptional costs of £29 million for the current year. No surprise, then, that HMV is looking to divest the ailing bookstores and minimize the capacity for further debt. PPM Ventures is still interested in purchasing the bookstores; the sticking point appears to be HMV's insistence on retaining a stake in the business, and possibly the management, of the book chain, in order to get a return on its sizable investment.
Waterstone's operating profit for 2001 has fallen to £18.6 million, down 26.8% from 2000 when it was £25.4 million. Back in 1999 the book chain's profits were more than double, at £39.8 million, proving how quickly its fortunes have changed.
