John Ezard and David Teather 

Few tears as books chain chief quits

David Kneale abruptly lost his job yesterday as managing director of Waterstone's, Britain's biggest quality bookshop chain.
  
  


David Kneale abruptly lost his job yesterday as managing director of Waterstone's, Britain's biggest quality bookshop chain.

His departure - together with that of his operations director, Brian Worrall - was announced after a year in which he had publicly locked horns with hundreds of independent publishers and some of his own bookshop managers in an attempt to turn his company around financially.

At the peak of the unrest late last year, Mr Kneale, 47, was accused on BBC2's Newsnight of bullying small presses. Last night one independent publisher, asking not to be named, said, "There is no sorrow around that he has gone".

The departures are understood to have been agreed late on Friday after a meeting with Alan Giles, chief executive of HMV Media, Waterstone's parent group.

Yesterday's brief HMV statement said Mr Kneale and Mr Worrall had "agreed to leave the company with immediate effect", with another senior executive, Brian McLaughlin, temporarily stepping in as managing director.

Mr McLaughlin said both men understood "that a change in approach is necessary in order to accelerate the recovery of the business". The parting was "amicable".

It was, among other factors, Mr Kneale's efforts to increase centralisation of book ordering which brought conflict with sections of the book trade. He maintained the chain had 16m unsold books, partly because branch managers had become "a soft touch" for publishers' sales reps.

He sent a shiver through the trade by threatening to breach a hallowed publishing ritual by stopping his managers seeing reps. He dismissed his Manchester Piccadilly manager, Robert Topping, for allegedly failing to conform to the new policy.

He did, however, command some sympathetic respect among analysts for his dilemmas within a struggling chain with an indebted parent company and a static books market.

This was not immediately reflected in last night's reaction from the independent presses which succeeded in partly reversing his attempts to impose book discounts of up to 50% on them this winter.

Gary Pulsifer, head of Arcadia Press, said: "Waterstone's have had a solid year of bad publicity in different areas.

"That must have played a part in these departures."

Sheila Bounford, secretary of the 350-strong Independent Publishers Guild, said: "We hope the change of approach announced by Brian McLaughlin will include quickly taking steps to repair the damage to trading relationships with small and independent publishers done in recent months.

"Publishers will be looking for signals from Waterstone's that the new management will recognise their importance to the reading public's perception of Waterstone's as the UK's premier range-holding bookselling chain".

Last year was disastrous for Waterstone's. Comparable sales for the chain fell marginally to £404m while operating profits at the book chain slumped by 34% to £26.4m.

Part of the blame was put on disruption caused by the merger of Waterstone's and Dillons but the chain also suffered from intense price competition.

There was some better news in the run up to Christmas when sales improved by 5.6% but longer term sales have stabilised at best.

Although HMV Media is not actively seeking buyers for Waterstone's, insiders at the group suggest it would not baulk at a decent offer. The group, which is largely owned by EMI and the venture capital firm Advent, is saddled with debts of around £567m.

Last year it turned down at least two approaches, one from Bertelsmann, the German media group which owns the Random House publishing business, and one from the founder, Tim Waterstone.

Mr Waterstone, who has been a fierce critic of HMV Media's stewardship of the chain, is still keen to buy the business back. He has secured backing in principle from the venture capital arm of the Prudential but has so far been unable to raise sufficient funds for a bid.

 

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