Whitcoulls sale raises more questions than it answers

By Aimee McClinchy

Friday 26th May 2000

STAYING TOGETHER: Whitcoulls and other booksellers

Blue Star Group (BSG) is to sell its consumer retailing group and will not consider splitting its Whitcoulls, Angus & Robertson and Bennetts Books' assets up in the sale, the company said.

Credit Suisse Boston has been appointed to handle the sale of the group, which had gross revenues of almost $500 million across Australia and New Zealand last year.

The sale has been rumoured since March last year when the group's parent company US Office Products signalled it would be exiting non-core assets.

It comes as Whitcoulls finishes rolling out its new $6 million SAP computer system and the chain confirmed it is cutting back its bulk book title purchases for the next few months to nurse the top-of-the-line SAP system in.

Some publishing houses have privately voiced concerns the low buying patterns are to be more permanent, forcing publishers to carry more of the risk of a punt on a title.

"The publisher may carry more risk: it spins out payback times and may change our whole business approach," said one publisher, who asked not to be identified.

"If Whitcoulls goes too far that way - toward 'just in time' stocking, centralised distribution - experience shows it may damage sales levels."

One publisher said Whitcoulls was more than $4 million overstocked and wanted to keep future stocks low in preparation for the sale.

But BSG consumer retail group head Mike Ferrand dismissed overstocking claims, saying they would hold a June sale as usual. He said the low buying pattern was only short term.

"This is not a medium- or long-term proposition, it's just as we put in new tools.

"We will have a significantly higher level of information about the books when we purchase [with the new system]. It's in both our interests to know what sells and when."

He said the system was world class and would be up and running well before a deal to sell the company, which should be finalised by spring.

Mr Ferrand would not reveal what part Whitcoulls contributed to the $500 million annual gross revenues. But he said sales in Australia, where Angus & Robertson Bookworld has 159 stores and is the biggest bookstore chain, made up roughly half that amount.

Mr Ferrand said Whitcoulls has made considerable investments in rebranding, owns the Bennetts chain and a 21-store joint venture with New Zealand Post.

Market speculation of potential interested local buyers has centred on The Warehouse but founder Stephen Tindall had earlier denied he was interested. Mr Ferrand refused to reveal who had approached Blue Star.

Meanwhile, the ownership structure in online retailer FlyingPig looks uncertain. Mr Ferrand confirmed FlyingPig, which last week announced its merger with Australian company TheSpot.com.au (NBR, May 19), would still fulfil orders for Angus & Robertson and Whitcoulls in the future.

But he would not confirm if Whitcoull's pre-merger 19% shareholding in FlyingPig would be transferred to the new owners.

"It is too early to tell," he said.

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