Profit up at Waterstones despite lack of significant bestsellers

Waterstones recorded a profit of £22.7m last year, up 39% on 2018, as the retailer highlighted a lack of significant bestselling titles with sales increasing 1.8% during a "moment of extraordinary change" for the company, said m.d. James Daunt.

The retailer’s accounts, filed at Companies House this week, cover the year to 27th April 2019 and take in a period of "significant change" which saw the acquisition of Foyles in September 2018 and US hedge fund Elliott Advisors purchase of Waterstones in April 2018.

A further capital investment of £7m was made in the firm, with four new shops opened. "Waterstones continues to seek to improve the standards of bookselling within its shops by the training and enhanced career development of its booksellers and to support this with investment in the shops themselves and the operational infrastructure," said directors.

The period saw David Walliams' The Ice Monster and Michelle Obama's Becoming (Viking) published, with Adam Kay's This is Going to Hurt (Picador) released in paperback in mid-April 2018, selling 703,411 copies up to 27th April 2019, according to BookScan. Other releases during the period, included Pinch of Nom (Bluebird) and The Tattoist of Auschwitz (Zaffre). Waterstones reported sales for the year were up to £392.8m (2018: £385.7m) "in a period of absent of significant bestselling titles", as sales on non-book items continued to grow.

Daunt told The Bookseller: "It was one of those years, we had Michelle Obama and it was a pretty strong year, and then the waters parted and some of the books that might have come in–Barack Obama and Hilary Mantel–didn't and we had to rely on ourselves."

He added: "Sales are up in a very difficult trading environment with a lot of things going on and it's been a moment of extraordinary change, and Barnes & Noble followed shortly after. We are in the hands of a very ambitious owner who is pushing the business on and that's quite exciting."

Waterstones said pre-tax profits increased to £26.5m from £19.9m in 2018, with four new shops opening in the period and five closing down, bringing the estate to 278 shops.

Speaking from New York, Daunt, who took on the role of Barnes & Noble c.e.o. in August, added: "Barnes & Noble is very much back to Waterstones in 2011/2012. I'm hoping for the same recipe–devolving responsibility to local booksellers, improving the book offer and booksellers trying to get their shops right for the community."

Foyles, which operates seven bookshops in the UK, filed its results separately at Companies House. The retailer made a pre-tax loss of £257,000 as turnover dipped to £22.6m, down 13% from 2018, citing trading conditions were "challenging due to a relative lack of good publishing during the year".

Separate accounts for Book Retail Midco Limited, which owns both Waterstones and Foyles, showed group sales of £395.7m, with exceptional acquisition costs of £7.2m related to Foyles, reducing profit by half to £8m. The accounts showed that it paid £8.5m for Foyles, which contributed £14.7m in sales and £392,000 in profit since the acquisition. The figures suggest that Foyles has moved into profit since being acquired, albeit only based on part-year accounts.