Buoyant Ottakar's Eyes Waterstone's

Speculation is rampant in London that Ottakar's book chain has been in talks with HMV Media, parent company of the ailing Waterstone's stores. Industry sources suggest that Ottakar's retail success and rapid turnaround in the past two years has given the Ottakar's management team, led by managing director James Heneage, access to venture capital to make a bid for Waterstone's. HMV is looking to divest the book chain, but in March turned down a bid of £180 million ($270 million) from founder Tim Waterstone.

Ottakar's has at present 74 stores across England, Scotland and Wales. The company's carefully controlled rollout of stores continues in 2001 with the opening of two stores in prestigious locations—Jersey and Lymington—as well as the acquisition of three stores in the North of England, which will reopen this fall. The acquisitions were announced earlier this month when Ottakar's spectacular annual results were released. For the 12 months ended January 27, 2001, Ottakar's had a record operating profit of £3.5 million and sales were up 18.3%, to £86.3 million.

Since 1987, when Heneage set up Ottakar's with five stores in the South of England, he has gained respect from the industry for his clarity of vision and the development of his accessible, welcoming style of book retailing. Heneage's loyal team has weathered market storms. In 1998 rumors of a bid from Barnes & Noble sent the share price rocketing only to be followed by a profit warning after the downturn. Current results follow the upward trend with sales, up 13.2% for the 15 weeks ended May 12, 2001.

In spite of the synergies in Ottakar's and Waterstone's management, and the fact that the shops barely overlap, Heneage has asserted that Ottakar's has no plans to merge with any of its competitors and insists that they are not in talks.