A quarter of the company's 160 head-office staff in Birmingham will be made redundant, while the rest of the job losses will be spread across its 149 bookshops.
The company, part of the Pentos group which declared pre-tax losses of pounds 70.6m for 1993, said the redundancies and reorganisation were part of a drive to make the bookseller leaner and more responsive to customers.
But a leading retail ananlyst said he believed the move was part of a cost-cutting exercise because Dillons had merely broken even on a turnover of pounds 138.7m in 1993.
However, Sean Eddie, retail analyst at Natwest Securities, said the changes and Dillons' professed desire to reduce stock levels would have little or no effect on the service to book buyers. The chain's present difficulties were the result of rapid expansion in 1991 and 1992 as it competed against its nearest rival, Waterstone's.
But the agressive policy, pushed by Pentos's former chief executive, Terry Maher, has left the company with a unsustainable overheads, particularly in the high rents it must pay for the prime sites. The group's 1993 losses were immediately followed by the departure of Mr Maher. His replacement, Bill McGrath, put in place the review that led to yesterday's redundancies.