UK Edition
Waterstones returns to profit thanks to a return to 'traditional bookselling'
Waterstones has returned to profit for the first time in seven years thanks to a return to traditional bookselling and a boom in children’s books.
Accounts filed for the company for the 12 months to April 2016 showed that its pre-tax profit was £11.9m for the year, compared to a £3.4m loss a year previously.
The figures reflect a dramatic recovery for the once-beleaguered retailer, which struggled during the worst years of the recession as competition from online retailers and ebooks ate away at its core sales.
However, over the last three years, the company has returned to growth thanks to a rise in sales of physical books and a gradual decline in digital book sales. In 2015, the company saw its first rise in sales since it was bought by Russian billionaire Alexander Mamut in 2011, and in 2016, sales were up a further 4.3pc to £409.1m.
James Daunt, chief executive of Waterstones, said the business’s decision to reposition itself as a more traditional bookseller had brought more customers through its doors.
“In 2010 and 2011, things fell off a cliff,” he said. “But for the last three years we’ve been reducing our losses and moving into profit.” The last time the company reported any pre-tax profit was in 2009, when it made £7.9m.
“We used to be a seller of bestsellers, but now we’re trying to be community bookshops in a more old-fashioned and traditional way.”
This has increased its sales of more ‘heavyweight’ fiction books, he explained. The Essex Serpent, a novel by newcomer Sarah Perry, was its best selling book last year, ahead of popular writers such as Lee Child.
Waterstones has also seen a 25pc rise in sales of children’s books since 2010, Mr Daunt said. “We’ve seen a particular increase in the number of children’s educational books sold, and the margins on those are huge,” he said, adding that the company was heading towards a return to 2007 levels of sales across the board.
"Teenage books have sold well, and the new Harry Potter has also given that a boost."
The retailer also increased its sales on non-book items, such as stationery, notebooks and cards, he said, although sales of academic books had slowed, as students buy more books from Amazon or borrow them. This had led to a "change in the mix of sales" as well as an increase in volume.
Waterstones opened seven new stores in the 12 months to April 2016, and plans to open a similar number this year.