HMV ditches Ottakar's name

Waterstone’s owner HMV ditched the name of newly-acquired Ottakar’s today as it outlined plans to close bookshops and offices, which could threaten around 200 jobs.

HMV said it will close “a handful” of bookshops where Ottakar’s and Waterstone’s overlap, as well as three Ottakar’s offices in Salisbury, London Bridge and Clapham.

Ottakar’s currently has 109 administrative staff at the three sites and an average of 15 employees in each of its bookshops, which will be renamed Waterstone’s.

It is thought that the closure of the offices and the handful of bookshops could result in about 200 job cuts, although HMV did not put a number on it today.

The move follows the completion of the £62.9m (€90.6m) takeover deal on Monday which gave HMV 141 Ottakar’s bookshops on top of the 194 it has under the Waterstone’s banner, and its 223 music stores.

HMV today said: “There are 32 overlap locations where Waterstone’s and Ottakar’s had previously competed with each other.

“We anticipate, in the foreseeable future, that we will operate from one bookstore only in a handful of these locations.”

HMV said the integration of Ottakar’s and Waterstone’s into a single business will be completed before the key Christmas trading period and will see all administrative work move to the Waterstone’s head office in Brentford, Middlesex.

The company aims to make about £10m (€14.4m) of cost savings through the takeover in the next two years.

Both Waterstone’s and Ottakar’s have struggled to compete with low prices offered by supermarkets and internet bookshops such as Amazon in recent years.

Waterstone’s today posted a 6.1% slump in like-for-like sales for the nine weeks to July 1 while Ottakar’s recently said like-for-like sales in the 16 weeks to May 20 were down 8%.

HMV hopes the combined business will help drive sales as it battles to regain market share from supermarkets and the internet. It also said Ottakar’s will benefit from being able to offer a greater choice of books and more promotions with the backing of Waterstone’s.

The £62.9m (€90.6m) deal for Ottakar’s was considerably cheaper than the £96.4m (€138.9m) offered by HMV last year. That deal was scuppered by a competition investigation and HMV tabled the lower offer after Ottakar’s suffered a further decline in trading.

John Stevenson, of Shore Capital stockbrokers, said it was a good deal for HMV.

“The group has stated that it anticipates £10m (€14.4m) of cost synergies in 2007-2008,” he said.

“This is towards the top end of our expectations and reiterates our impression that Ottakar’s was somewhat of a bargain with the acquisition expected to be earnings enhancing within the current year.”

Ottakar’s has been ever present on the high street since it began life in 1987 and was named after the Tintin story King Ottakar’s Sceptre.