Collins Booksellers acquires Book City

Collins Booksellers is on the acquisition trail. Yesterday the franchised book chain announced it has bought the Book City group for an undisclosed sum, effectively doubling its size.

Duncan Johnston, executive chairman of Collins Booksellers, says the acquisition is just the beginning of the chain’s plans for growth. “We are still trying to grow by acquisitions. We are in discussions as we speak. We only want all franchisee-owned operations, owner operator. No company-owned operators.”

The Collins Booksellers franchisor went into administration in 2005 and 24 of its 29 franchisees bought the brand and kept trading. Most of the company-owned stores were closed. Since then Collins has grown into a chain of 32 franchised stores.

The combined chains will have more than 60 stores combined and Collins says it plans to open another 10 outlets within the next 12 months.

The purchase of Book City has been funded by shareholders and some bank borrowings.

Johnston says Collins wants growth to improve the gift voucher business, get better discounts from suppliers and publishers and improve advertising and marketing. “And it gives us good opportunities to do benchmarking to improve stores from a net profit point of view.”

He says over the past few years the chain has focused on improving profitability by benchmarking costs, assessing marketing campaigns, and chasing products that provide better gross profit margins. And it has been successful. “At the first conference we had 15 unprofitable stores and by the last conference, it was only four.”