City scorns WH Smith
Sunday 30 May 1999
WH Smith paid pounds 18m for 51.9 per cent of the imprint. The deal makes the company Britain's third-largest publishing house but has led to a sharp fall in its share price.
Analysts were dismissive. "It's a ridiculous deal. WH Smith has paid a whopping price to become a vertically integrated retailer," said one.
"Who else does this successfully? That's what the market is struggling with," said another.
"They have spent the remaining cash in the balance sheet. This was supposed to be the deal that made WH Smith a better business. But it's too far- fetched to work," commented a third.
Richard Handover, WH Smith's chief executive, insisted that the move would enhance earnings and was crucial to the company's plans to withstand the onslaught of supermarkets and internet retailers.
"WH Smith has a huge legacy in terms of brand. We want to extend that," he said.
WH Smith aims to distinguish itself from other retailers by selling more branded products, Mr Handover said: "We believe that content ownership is going to be very important." Currently there is very little that WH Smith sells exclusively.
The book market, where WH Smith has a 17.5 per cent market share, is changing rapidly. According to London International Bookfair, part of Reed Elsevier, the UK book market will grow by a fifth to pounds 3.3bn by 2002, with internet sales taking 12 per cent of the market. Moreover, it predicts that supermarkets will treble their market share from 5 per cent to 15 per cent.
WH Smith has responded aggressively. Mr Handover has disposed of Our Price and Waterstone's; sold and leased back its stores; and invested in Menzies, the Internet Book Store, Helicon (the encyclopedia and electronic publisher), and now Hodder Headline, which is also an important publisher of educational and professional books. "Hodder gives us the ability to be creative and aggressive," Mr Handover said.
At the same time, he is striving to improve the chain's high-street stores, which he admits have suffered from lack of attention.
The purchase of Hodder is only part of his strategy. WH Smith Online, the free internet portal, was launched in April. And in September, WH Smith will start to sell books through Open, the interactive digital television venture controlled by BSkyB and BT.
- 1 Howard Jacobson: Let's see the 'criticism' of Israel for what it really is
- 2 Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
- 4 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
Gingers face extinction due to climate change, scientists warn
Mick Jagger denies being World Cup curse and reason for Brazil’s embarrassing defeat
Do you know this man? Amnesia sufferer found in park pleads for help in identifying who he is
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
Vanessa Feltz criticises 'vile' reaction to Rolf Harris allegations
iJobs Money & Business
£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...
£60000 per annum: Harrington Starr: A leading provider in investment managemen...
£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...
£30000 per annum: Harrington Starr: A global leader in trading platforms and e...