Eason's profits tumble to €8m

Eason, the bookseller, has said the failure of the publishing industry to produce new blockbusters on a par with Dan Brown's Da Vinci Code and Cecelia Ahern's Where Rainbows End contributed to a 55 per cent drop in operating profits to €8.1 million last year, writes Arthur Beesley, Senior Business Correspondent

With big-selling hardbacks in short supply at Christmas at the end of a "challenging" year and the combination of supermarket and internet sales eating into sales at traditional bookshops generally, managing director Gordon Bolton said Eason had increased its marketing activities to defend market share.

"It was a bad year for sales. A lot of shops couldn't even maintain sales figures from the previous year. Even this year it's difficult enough to maintain last year's figures," he said.

"You might say there's SSIAs maturing, but the money is not going into the book business."

Mr Bolton said a big-selling Harry Potter title last year failed to deliver an uplift in profits due to heavy discounting, but said there were big expectations this year from new books by Meave Binchy and the rock band U2.

Eason & Son is investing €30 million in a 170,000 sq ft warehouse at St Margaret's, north Co Dublin, to generate efficiencies in the business. It has two warehouses, in Santry and Crumlin, leading to some duplication. "We're trying to put it all under one roof to get synergies," Mr Bolton said.

Accounts filed this week show that Eason's bottom line in the year to January was flattered by a €7.78 million profit on the sale to Alphyra of its 51 per cent stake in Eason Electronic, which provides top-up credit for mobile phones.

The pretax profit was €17.68 million, down from €20.26 million in the previous year. Turnover fell to €450.62 million from €464.8 million, due in part to the Eason Electronic disposal in July. The profit after tax and minority interests rose marginally to €15.57 million from €15.5 million.

"Trading was challenging and particularly competitive in the last quarter of the year, especially in the sterling area. Operating profits were substantially reduced," said Eason's directors.

The company spent €4 million buying the two Reads outlets in Dublin and Cork last November, taking a position in the discount book trade. It plans to open a Reads outlet in Belfast, using the same business model.

Eason is one of the oldest privately-owned companies in the State. Its 220 shareholders include descendents of Charles Eason, who bought the business from WH Smith in 1886, as well as past and present management and staff. Its board owns 23 per cent of the company. The dividend to 12.5 cent per share from 10 cent per share, increasing its dividend charge to €2.5 million from €2 million.

The chain has 50 stores in the Republic and Northern Ireland. Four company-owned stores opened last year and one more, in Newbridge, opened this year. Three franchise stores opened last year and four more have opened in the current period.

Its purchase of 52 British Bookshops & Stationers outlets in south-east England closed in 2005. Significant investment in these stores affected profits.

Eason also has a book wholesale unit, a magazine-newspaper distribution arm, and two south African firms selling phone top-ups and prepaid electricity.