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Bookselling: Thalia Admits Big Drop In Earnings; Random House Extends Free Shipping; Two Fall Regional Shows Merge

January 11, 2012
By Michael Cader

Germany’s largest bookstore chain Thalia is facing the same challenges as major booksellers in English-speaking countries, with parent company Dougles reducing their forecast EBITDA for the current fiscal year by a range of 15 to 30 percent, driving shares down sharply. The company warned that they will incur unspecified “expenditures for restructuring at Thalia” and blamed “the structural challenges in the entire books sector” for the earnings reduction. One German analyst told Bloomberg the company needs to make clear the restructuring costs and “and in general has to provide solutions and measures to get rid of the structural problems at Thalia.”

In a realization that sounds like too little too late, the company says it is “facing the major challenge of compensating lower sales in its brick-and-mortar bookstores as quickly as possible by offering additional attractive product lines. Furthermore, Thalia must find the optimum way of integrating its brick-and-mortar stores with its online shops so that it can leverage the potential of the new mega trend, the ebook.”

Like booksellers elsewhere in the world, ceo Henning Kreke acknowledges that “only if we achieve operational excellence in all of these sectors can we keep up with the extremely rapid development of Amazon, the market leader.” Thalia launched their OYO reader and online comprises 14 percent of their sales, but Amazon launched Kindle in Germany in 2011 (and Kobo launched a German store as well).

In the most recent fiscal year, ending September 2011, “the figures for our books division fell significantly short of the budgeted figures.” Earnings before taxes were just 5 million euros, down from 20 million euros the prior year, on sales of 935 million euros (down 1 percent on a like-for-like basis). For the first quarter of the new fiscal year, book sales were up 1.1 percent. Random House says their holiday “2-day-transit program” providing quick free shipping to independent booksellers “resulted in a significant increase in sales and reorders at physical retail.” So they are extending the offer through March 2.

The Midwest Booksellers Association and the Great Lakes Independent Booksellers Association have agreed to hold a combined, “expanded trade share for both of our regions.” The Heartland Fall Forum show will be held October 3–5 in Minneapolis; the 2013 show will move to GLIBA’s region at a location to be determined.

Filed Under: Booksellers, Bookstores, Earnings Reports, Free, International News

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