Bookseller Waterstones may have seen an uplift in sales in 2023, however profits have plummeted following a backlog of orders caused by issues with its stock distribution technology.
Its statement for the 52 weeks to 29 April 2023 showed pre-tax profits fell to £11.2mn, less than a quarter of the £50.6mn it reported the year before.
Waterstones had previously stressed that its new warehouse system was now “stable and effective”, but the book retailer admitted that it needed to clear a backlog of orders before the “painful process” is over.
Waterstones upgraded to a new warehouse system in 2022, but soon after reported that technical problems lead to it struggling to get stock out to shops and fulfil direct-to-customer orders. This in turn “impacted sales and resulted in the temporary elevation of operating costs and reduction in margin”.
While the warehouse system issues may have hit Waterstones’ profits, the bookseller saw full-year sales increase by 13% to £452.5mn, up from £399.8mn. It credited footfall and sales recovering post pandemic for this lift. The retailer has seen “encouraging growth in London and other metropolitan areas as tourist numbers increase and workers return to the office”.
Waterstones added that it had benefited from the “increased popularity of both reading and physical bookshops, supported notably by social media and positive press coverage”.
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