Blue Star regrouping mooted as Whitcoulls battles

By Aimee McClinchy

Friday 17th March 2000

TOUGH YEAR: Fran Stanley

Book chain Whitcoulls concedes it has had a "tough year" and has been forced to stop buying bulk books while it brings in its new computer system.

Whitcoulls, part of Blue Star Group, has been undergoing a revamp under head Fran Stanley, recently renamed general manager of Blue Star consumer retail in internal restructuring.

Whitcoulls had faced a tough year because the book market was static but was coming out the other side, Ms Stanley said.

Other retailers such as US entrant Borders, with its single Queen St store, and Australian chain Dymocks have reported booming business.

Although revenues were slightly up, the company had decided to dramatically scale back bulk promotional-book purchases while it implemented its $6 million live inventory system over the next few weeks.

Purchases would be down for the next two months, Ms Stanley said.

Whitcoulls will be attempting to avoid a repeat of its mid-1990s overstocking crisis when the then-listed company's systems failed.

Its latest changes have fuelled long-running speculation the chain is for sale, with some industry sources picking it will be bundled into a retail group with other Blue Star-linked assets Pacific Retail Group and Flying Pig.

Analysts and company heads have conceded the possibility of the Eric Watson "mega-retail" grouping, but say there is nothing official on paper.

Ms Stanley said: "It is a possibility," adding there was "no acceleration on the sale [front]."

Industry buzz about the sale suggests other interested buyers include Hellaby Holdings and The Warehouse, but The Warehouse founder Stephen Tindall said it was focusing attention on its Warehouse Stationary brand.

Ord Minnett analyst Karen Wilson said a grouping would tidy up the technically inter-related affairs of the companies, while divesting US Office Products of its retail Blue Star assets as it had signalled it would do last year.

It would also capitalise on the growth of book sales on Flying Pig.

Eric Watson, who has bought back the business solutions division of Blue Star and has interests in Pacific Retail, said he was happy with Flying Pig's progress and called it the "dominant online retailer."

Mr Watson said the homegrown model had possibilities in Australia and more widely in Asia.

Some market sources suggested Mr Watson was to divest himself of his Blue Star assets but Mr Watson said "I've only just bought them - I don't want to comment."

He also would not comment on the possibility of a more formal grouping of Pacific Retail, Whitcoulls and Flying Pig.

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