THE WALL STREET JOURNAL. Friday, August 9, 2019 |B3
the larger chain, said a person
familiar with the matter.
The hedge fund took com-
fort in the stabilizing market
for physical books. It plans to
expand the chain’s footprint
by opening smaller stores inhigh-traffic locations such as
city centers, the person said.
Mr. Daunt—who describes
the U.S. as “extraordinarily un-
derbookshopped”—said he
doesn’t expect to close many
stores. He will first look to re-
negotiate the 20% of leases
that end each year to ensure
stores are profitable.
About 80% of Barnes & No-
ble’s books are bought and al-
located by its head office,
while all promotions are de-
cided centrally, Mr. Daunt and
publishing executives said.
Publishers pay tens of thou-
sands of dollars for chain
bookstores to display their
new books on promotional ta-
bles for a few weeks. That
means shoppers at a Barnes &
Noble in Manhattan will see
the same titles on display as
visitors to a branch in Idaho
Falls. Books that don’t sell are
sent back to publishers.
Mr. Daunt stopped accept-
ing placement payments from
publishers for Waterstones,
which he said decreased the
share of books stores sentSober Reading
Americansarereadinglessthantheydidevenafewyearsago.Percentage of U.S. adults who have read
or listened to a book in the past 12 monthsSource: Pew Research Center telephone surveys, most recent of 2,002 adults
conducted Jan. 3-10, 2018. Margin of error: ±2.43 pct. pts.Note: Print, e-book and audiobook responses add up to more than the
total percentage for any format because respondents could pick multiple options.800204060%2011 ’12 ’13 ’14 ’15 ’16 ’17 ’18Anyformat
PrintE-book
Audiobookstemmed falling sales in Eu-
rope and turned around its
long-ailing Reebok brand.
Adidas said profit for the
three months to the end of
June totaled €531 million
($595 million), up 34% from a
year earlier. Sales rose 4.7% to
€5.5 billion. Analysts had fore-
cast net profit of €464.7 mil-
lion and sales of €5.54 billion.
Growth in revenue was
driven by China, the mainstay
Adidas and Reebok brands,
and e-commerce. But revenue
was damped by a drop in sales
of soccer products, which were
up sharply last year because of
the FIFA World Cup.
Mr. Rorsted attributed the
strong earnings to lower taxes,
positive foreign-exchange ef-
fects, and the impact of
growth in China and improve-
ment in Europe. He said bot-
tlenecks caused by supply-
chain issues in the U.S. would
be resolved by year-end.
China was by far the big-
gest driver of Adidas’s revenue
growth in the second quarter.
Sales in China rose 14% from a
year earlier. Rival Nike Inc.,
whose business year ended on
May 31, said its sales in China
increased 16% in its fiscal
fourth quarter.
The upbeat report by Adi-
das is a rare bright spot in
Germany, where many of thecountry’s biggest companies
have reported disappointing
earnings, hit by falling de-
mand in the global auto indus-
try, the U.S.-China trade war,
and a number of criminal in-
vestigations and lawsuits.
Adidas’s sales on a cur-
rency-neutral basis rose in
most regional markets, post-
ing double-digit growth in
China. Sales in North America
increased 6%, driven by
growth in Reebok products.BERLIN—AdidasAG posted
higher quarterly earnings on
strong sales in China and pre-
dicted growth in the second
half, but the German sports-
wear company warned that a
protracted trade and currency
war could derail the global
economy and hurt business.
Retailers such as Adidas
have continued to benefit from
strong sales in China, and
many that produce goods
there remain insulated from
the trade dispute with the U.S.
But that could change if the
conflict deepens and infects
the global economy.
“Having the two biggest
economies in the world right
now at odds with each other
has a negative impact on both
economies,” Adidas Chief Ex-
ecutive Kasper Rorsted told
reporters on a conference call
on Thursday. “But if we have a
currency war that will be a sit-
uation where everyone loses.”
Even though Adidas pub-
lished second-quarter earnings
that beat analysts’ forecasts,
investors were disappointed
with weak global sales growth.
Shares in Adidas fell 2.2%.
Mr. Rorsted said he ex-
pected the company to have a
“milestone year” amid strong
growth in China, havingBYWILLIAMBOSTONAdidas Gets Lift From China,
But Warns of Trade Dangers
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below £8 million in 2011, Mr.
Daunt said.
Elliott, which bought Wa-
terstones in 2018, decided to
buy Barnes & Noble after Mr.
Daunt convinced executives
his strategy could translate tolent and I think Barnes & No-
ble having him attempting to
turn the ship around is as
good news as anyone could
have asked for,” said Oren Te-
icher, head of the American
Booksellers Association.
But Barnes & Noble has
twiceasmanystoresasWa-
terstones. Many are larger and
in less desirable locations,
such as strip malls rather than
busy shopping streets.
“Barnes & Noble stores are
too big to be filled with as-
sortments of local relevance
and be economically viable,”
said Mark Cohen, director of
retail studies at Columbia
Business School.
The new CEO, who will re-
locate to New York, will have
to woo Americans who are
reading less. The percentage
of U.S. adults who said they
had read a book in any format
over the past 12 months
dropped to 74% last year from
79% in 2011, according to Pew
Research Center.
Mr. Daunt—who started his
career as an investment
banker—opened his first book-
store in London in 1990, at age- He named it Daunt Books
and opened a further eight
stores, all of which exist today
and remain independent.
In 2011, Mr. Daunt was
hired to stem sliding sales at
Waterstones by Russian bil-
lionaire Alexander Mamut,
who bought the British chain
for £53 million ($64 million)
from HMV Group PLC.
Revenue deteriorated for
three more years, hurt by
competition from Ama-
zon.com Inc.’s Kindle. Mr.
Daunt decentralized decision
making and refurbished stores.
He closed the head office, and
moved some managers to
space above the flagship store
in London’s Piccadilly Circus
and others to regional loca-
tions near clusters of stores.
For fiscal 2018, Waterstones
reported an underlying profit
of £16.32 million across its 278
shops, compared with a loss of
£42.91 million for 2012 from
286 stores. Sales at the Picca-
dilly store are on track to hit
£14 million this year, up from
BUSINESS NEWS
LONDON—Barnes & Noble
Inc.’s new chief executive
wants to run America’s largest
bookstore chain more like a
collection of 627 independent
stores.
James Daunt, who also
leads Britain’s largest book-
store chain, Waterstones, on
Wednesday became Barnes &
Noble’s fifth permanent chief
executive in six years after
hedge fundElliott Manage-
mentCorp. closed its deal to
buy the company. The New
York-based chain long worked
to give its locations a similar
look, feel and inventory, but
readers shunned the stores in
recent years.
Mr. Daunt plans to reinvigo-
rate the U.S. book giant by ap-
plying a playbook that hasworked well in the U.K.: giving
individual stores the auton-
omy to buy and promote
books they bet will resonate
with the local clientele.
“Barnes & Noble is what
Waterstones used to be. They
run identical bookshops up
and down the country,” Mr.
Daunt said. “You should do
what you want; there are no
restrictions on what books you
stock, how you display them,
what you promote. Each book-
shop is quite individual.”
The 55-year-old Briton, who
led Waterstones out of a diffi-
cult period earlier this decade
and will remain its CEO, is
widely respected in the book
industry. “His sensibilities
about our business are excel-BYSAABIRACHAUDHURIback to 3% from 25%. He is
aiming for a similar reduction
at Barnes & Noble.
“You need to try to put the
right books in the right places
and it requires you to trust
the local people to make the
right decisions,” he said.
At Waterstones, central
buyers send stores limited
copies of books they think will
work at a given location but
further orders are made by lo-
cal buyers. Stores are sent a
daily compilation of reviews.
“You get lots of information
but no instruction,” Mr. Daunt
said. “It’s the opposite at
Barnes & Noble.”
Brian Murray, CEO of Harp-
erCollins Publishers, said
American book sales are more
media-driven than British
ones. That, he said, could
leave Barnes & Noble stores
that prioritize local input vul-
nerable to a shortage of books
for which there is national de-
mand, sending customers to
Amazon. HarperCollins Pub-
lishers is a unit of Wall Street
Journal parent News Corp.Barnes & Noble Pursues a Local Touch
New chief wants to
give individual
bookstores more sway
over sales, marketingJames Daunt became the bookseller’s fifth permanent CEO in six years Wednesday. He also leads U.K. bookstore chain Waterstones.JON ENOCH/WATERSTONES80%
Share of books bought and
allocated by chain’s head officeThe German sportswear maker said second-quarter profit rose 34%. A company store in Shanghai.SIPA ASIA/ZUMA PRESS
NY