Climbing the publishing ladder: Waterstones, let’s talk business.

In case you’re not from the UK (no I’m not staring at my stats hoping to break another record on most views in one day *wink wink nudge nudge*),  Waterstones is a British book retailer.

When I was a kid, I was granted temporary freedom from my parents’ invisible leash whenever we walked into Waterstones. I would run wild into the largest bookstore and disappear between the tall bookshelves. My father had to summon his ancestral hunting skills to find his young cub who would bounce around between the fantasy and mythology sections.

Or sometimes I’d be looking for my parents, and a whole scooby-doo running through the multiple door scene would unfold.

I’m sure the guys at the security monitors had a bit of entertainment.

Unfortunately, when the financial crisis happened, that beautiful Waterstones branch disappeared.

I recently read an article that Waterstones is planning to continue remodeling its stores. This strategy is a means for Waterstones to kick its sales into high gear and bring back the browsing experience for its readers.  From last April, Waterstones reported an operating loss, meaning negative income.

Yeah, negative income, very bad news. It gets worse.

Its pre-tax loss was 37 million pounds compared to 20.6 million pounds in the previous year (before April 2012). The article continues that Waterstones did remain cash positive.

Now let’s see if I remember my accounting: there are four financial statements that you can examine to see how healthy the business is:

1. Balance sheet

2. Income statement

3. Statement of Owner’s equity

4. Statement of cash flows

By stating that Waterstones had positive cash, I assume they mean they have a positive cash flow (if anyone knows any better please email me). But just because you have a positive cash flow doesn’t mean YAY! WE ARE PROFITABLE!

I wish.

It means Waterstones can pay its bills but not be profitable at the same time  (I’ll explain this paradox in an upcoming post).

You probably guessed it by now, but Waterstones did mention they have strong competition from online retailers.

Which can only mean one thing! AND ONE THING ONLY!

METAL GEAR E-BOOK!

METAL GEAR E-BOOK!

 

The remodeling ‘project’ will continue over the next two years, which qualifies this plan to a medium-term plan (from what I remember medium-term is usually 2-5 years, depending).

Why is this important?

1. Waterstones is one of the major retailers in Britain. It represents, in my opinion, how big retailers are dealing with the current market pressures.  Taking out the proverbial giant brings to question how will the jacks of the book retailing world last without a golden goose? Wait…that metaphor doesn’t fit….

2. Some intro into business basics?

3. Learning about major retailers outside America.

Oh and I intend to brush up on my accounting.

I never thought I’d hear  (or write) that ever….

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