Ottakar's finance director in surprise exit

Ottakar's announced the surprise resignation of its finance director yesterday as the book retailer reported narrower interim losses.

Ottakar's announced the surprise resignation of its finance director yesterday as the book retailer reported narrower interim losses.

Edward Knighton, who joined the company almost five years ago, said he would step down at the end of November. Investors were unnerved by news of his departure and the group's shares fell 11.5p to 363.5p.

James Heneage, the managing director who co-founded Ottakar's in 1987, said: "It is bad news but it doesn't betoken anything sinister with the numbers. They are extremely good."

Mr Knighton, 42, said he was not leaving for any particular job, but hoped to join another retailer as a finance director. "It would be nice to keep a foothold in the sector," he said. He will not receive any compensation for his decision to leave. He has a 1 per cent stake in the company.

Analysts said Mr Knighton, who is highly regarded, would be missed but did not seek to reduce their full-year forecasts.

Ottakar's said the absence of a new Harry Potter book had not held back its performance. Underlying sales rose 4 per cent in its first half and have since accelerated, rising 6.6 per cent during the past seven weeks.

Mr Heneage said: "The summer has been good for us, we like wet weather and there has been a terrific release schedule. We are looking forward to Christmas. There should be a strong end to the year." He expects heavy demand for autobiographies from Graham Norton, Jonny Wilkinson and Matthew Pinsent, while the latest novel by Louis de Bernières is also proving popular.

Mr Heneage said the sales performance was "encouraging" given that the comparative period saw the publication of the much-hyped fifth book in the Harry Potter series, Harry Potter and the Order of the Phoenix. Sales were also boosted by the popularity of the Richard and Judy book club programme on Channel 4, he added.

Mr Heneage defended the company's decision to announce Mr Knighton's exit before it had found a replacement. "We are a straightforward team and wanted to use the opportunity of seeing people to explain ourselves. There is nothing unusual."

The group, which like most retailers makes all of its profits in the second half of the year, reported losses of £2.8m for the six months to 31 July, down from £2.9m. Its gross margin edged higher, to 42.7 per cent from 41.6 per cent, reflecting cost savings achieved since it bought its smaller rival, Hammicks, last year.