Woolworths: trade at an impasse

Liz Thomson
News - Bookselling 02 Dec 2008

Despite support shown to Bertrams by the Booksellers Association, it appears that none of the major publishers is yet supplying Woolworths Group subsidiary Bertrams (which is not in administration), while horsetrading with the administrator has so far prevented any resumption of supply to EUK. 'Supermarkets probably have enough stock for the next couple of days,' a sales director told BookBrunch, 'but trading must start today or all is lost and EUK will go down... The problem is that we want X and the Administrator is so far offering only Y.' BookBrunch understands that Bertrams, while essentially sound, is heavily indebted to Woolworths. It is not clear why - possibly debt has been offloaded from elsewhere - but the effect will be to give Woolworths a stranglehold on the company.

The assumption remains that a CD/DVD or games distributor will buy EUK, and that, whatever the expressions of interest, Woolworths will go down. 'It's destined to go,' said an observer. 'It's just not sustainable because no one knows what it should be selling. It will be parcelled up.'

That leaves Bertrams THE, which everyone is agreed remains a viable business. The most likely option remains purchase by a Continental operator, with Lingenbrink, Libri and Koch, Neff - all of them German - plus Holland's Centraal Boekhuis among the potential buyers. The strong Euro would make the company attractive, but Germany in particular and the Eurozone in general are, like Britain, on the brink of recession, and European banks are tighter on lending than their UK counterparts.

Across the Atlantic and encouraged by a strengthening dollar, Ingram might well be a contender - it has a presence in the UK via Lightning Source, recently installed in a large new facility near Milton Keynes. But, again, there must be questions about finance - though as Ingram is an apparently healthy family company, it may be better placed than most.

Another possibility is a hitherto unknown supply chain player in a different yet comparable trade - though again, it would need a healthy balance sheet.

And there is a wild-card scenario: that Kip Bertram, who in 1999 (for between £35m and £40m) sold the company his mother founded and the two of them built up, could buy it back - or finance a management buy-out. When BookBrunch spoke to him yesterday, fresh from a shooting party in Norfolk, he denied it, seemingly emphatically.

'I've had enough stress and worry and Prozac from the business to last me a lifetime,' Bertram said with some conviction. 'I miss the customers and all those wonderful dinners and I'm interested in what's going on - but no, absolutely not!' Bertrams THE was, he continued, 'a super group and I'm confident it will all be fine. But I've no idea what will happen.' He expressed the hope that both the Bertrams Huddersfield-based library supply business and EUK, which is in Middlesex, would relocate to the Bertrams site in Norwich, which he still owns and where there are four acres ripe for development.

Indeed, Kip Bertram is now a property tycoon - and one of only a handful who has lately seen his fortune increase, according to a report in Suffolk & Essex Online on 21 October this year.

Older book trade hands, who traded with Bertrams in 'the good old days', wonder whether Kip Bertram is protesting too much. 'He's a restless soul - I'd be surprised if he's been entirely happy in retirement,' one well-known former bookseller suggested to BookBrunch. 'It's all about timing. Kip sold at the right time for at least £34m. I'd guess the Bertrams' P&L doesn't compare favourably to the old days, but the cash flow's probably good. You could possibly buy it for £20m.'

Maybe Kip Bertram, now 64, doesn't want the worry of owning the company that bears his name. But, as a prospector, perhaps funding an MBO would not be without its attractions. The current management team appear to be liked and respected, but whether they have sufficient credibility to raise money from the City in the current climate must be a matter for debate. Kip could probably write them a cheque - and then sit back and await a payday that would surely come.



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