Ruminator Stocks Up: Bookstore to Sell Shares of Itself
by Jim Milliot and Claire Kirch, PW Daily for Booksellers -- Publishers Weekly, 10/30/2003
Ruminator Books, founded in St. Paul, Minn., by David Unowksy in 1970, is looking to raise between $450,000 and $1 million in a public offering. Proceeds from the offering, which is being made only in Minnesota, will be used to pay past-due rent, overdue loans and outstanding accounts payable as well as provide the retailer with cash to purchase additional inventory and fund sales and marketing initiatives. Ruminator, originally founded as the Hungry Mind, plans to combine the proceeds from the offering with a $300,000 loan from the Small Business Administration to reverse several years of declining sales."We're trying to make our store community-owned," Unowsky told PW Daily this morning. "We're selling each share for $1, with a minimum purchase of 250 shares and a maximum purchase by an individual investor of 400,000 shares. The offering lasts until a minimum of 450,000 shares are sold or until January 31. Other than that, the law is clear here. I really can't say much."
According to the offering documents, sales at the store fell 11.8% in 2002, to $2.9 million. The company attributed the decline primarily to a lack of cash that prevented the company from buying sufficient inventory. Ruminator had between 40,000 to 60,000 titles in inventory in 2002 and 2003, down from a high of about 100,000. Despite the drop in sales, cost controls, which included layoffs, a decrease in promotional expenses and the closing of its textbook store, helped Ruminator reduce its net loss in 2002 to $147,137 from $479,200.
A portion of Ruminator's revenue, 29% in 2002, came from the sale of textbooks to Macalester College; Ruminator had served as Macalester's bookstore from 1972 until this fall, when Macalester suspended the operating agreement. (The college will renew its contract with Ruminator Books only if the store obtains financing of at least $750,000.) As a result, Ruminator expects only about 19% of sales to come from sales to Macalester students this year. The college is also Ruminator's landlord; Ruminator owes $92,000 in back rent.
Ruminator said its current financial problems are the result of several factors, including the store's failure to adjust quickly to changes in the industry. The store was slow to introduce higher-margin items such as gift and cards to its inventory mix, which had focused almost solely on books. The store was also slow to computerize and to update its financial management controls. A slowing economy and overexpansion were also cited as factors for the store's financial struggles.
The company intends to continue publishing the quarterly Ruminator Review, although that publication, along with the company's book publishing subsidiary, Ruminator Publishing, are for sale. In January 2002, Ruminator had reached a preliminary agreement to sell the review for $300,000, but financing fell through. Ruminator Publishing will stop issuing new titles after December until a new buyer is found.
Yesterday Ruminator started publicizing its offering by handing out a flyer asking "Wanna Own a Bookstore?" The Ruminator Books Web site also offers visitors a piece of the store. Both flyer and Web site instruct those interested to stop by the store, call Unowsky or his wife, Pearl McBride, at 651-699-0587, or e-mail wanda@ruminator.com.
