Penguin chief pays price for distribution crisis

The head of the Penguin book business in the UK, Anthony Forbes Watson, has been abruptly ousted from the company, following a distribution crisis last year.

Mr Forbes Watson, 50, one of the best known figures in the British books industry, had been chief executive of Penguin in the UK for almost eight years and with the company for 15 years.

John Makinson, a Pearson board director who is the chairman and chief executive of Penguin on a worldwide basis, will take direct charge of the UK arm, which provides about one-third of Penguin's sales. He said yesterday that Mr Forbes Watson's "departure follows genuine differences of view on the way forward" for the Penguin business. Those differences were not explained.

One senior industry source said: "The talk in the trade was that Makinson himself may have to take the rap [for the distribution problems] but it appears that Forbes Watson is the fall guy." Penguin is part of the Pearson group, which publishes the Financial Times and has large US educational publishing interests. Last year, Penguin's new computerised warehouse at Rugby, Warwickshire, failed, leaving distribution of Penguin books in chaos.

Many titles were unavailable in shops for part of the year and the company was forced to incur million of pounds of extra costs in transporting books directly from printers to retailers. The good relationship that Penguin enjoyed with its authors was also damaged. Meg Geldens, an analyst at Invest Securities, said: "Somebody should be taking the blame for the mismanagement of the Rugby warehouse."

A spokeswoman for Penguin insisted that Mr Forbes Watson's departure, which was announced internally yesterday but took place on Monday, had "absolutely no connection" with the warehouse difficulties. Industry sources said few people believed the two events were unconnected. Mr Makinson, however, in a memo yesterday to colleagues, praised Mr Forbes Watson's handling of the warehouse issue.

Analysts expect 2004 Penguin profits to be sharply down on the previous year, when Pearson reports its financial results in the next few weeks.