Bookseller again hitting its stride

Hey there, time traveller!
This article was published 01/04/2010 (5881 days ago), so information in it may no longer be current.

After declaring bankruptcy a couple of days after Christmas, it looks like it’s back to business as usual at McNally Robinson Booksellers.

To get there, book-publishing and distribution businesses were forced to take a $3.2-million haircut, but at least they have somewhere to go with their expensive haircut.

Paul and Holly McNally bought the assets of the bankrupt company for about $6.6 million, $4.4 million of which was in the form of secured loans they’d made to the company in the past and the rest in the assumption of secured debt to banks and leasing companies.

Essentially, the cost of relaunching the business at its former Grant Park and Saskatoon locations (the Polo Park and Toronto stores closed immediately) has been borne by about 400 trade suppliers who were owed anywhere from a few dollars to the $450,000 that Random House of Canada is on the hook for.

But it is the nature of the bookselling business in Canada, and McNally Robinson’s special place in it, that all but a handful of those suppliers have re-established relations with McNally Robinson.

Those relations may include conditions like cash on delivery and non-returnable sales, but the point is suppliers are still doing business with McNally Robinson, which just last year was named Bookseller of the Year by the Canadian Booksellers Association.

"Things are going remarkably well," Paul McNally said. "Traffic is back, consumers are back, sales are back. We are feeling quite buoyant."

Of course, it’s not exactly as it was before. McNally has to re-establish credit with his suppliers and just as a bank would not want to immediately provide a mortgage to a homeowner who has just defaulted, his suppliers need to be certain the company is viable again.

"We are in a form of purgatory," he said. "And there is no single gatekeeper in this purgatory."

But it’s in those gatekeepers’ best interest not to let the McNally Robinson go further south.

"Publishing is a difficult racket, what with the rise of the ebook (and) smaller retail capacity, and having a Canadian bookseller that everyone more or less liked and respected go completely out of business was not in anyone’s interest," said one publisher who spoke on condition of anonymity.

Firefly Books, a mid-sized Toronto-based publisher and distributor of non-fiction and children’s books, was owed $42,495.99. Lionel Koffler, Firefly’s owner and publisher, echoed that sentiment.

"In a bankruptcy, a supplier loses what they were owed and they also lose a good customer for the future," Koffler said. "Over the medium and long term that future is far more important than the money owed today."

He said most of the publishing community is happy to still have McNally Robinson in the game.

"We have just turned our back on the past and we are dealing with the present and the future," he said.

The fragile nature of the bookselling business, with one national chain dominating in virtually every market across the country, means there are so few competitors to step into the market and take up the slack in the event of a bankruptcy.

One publisher said that McNally Robinson can play a stabilizing role in the market to offset what some see as heavy-handed conditions that the dominant player, Chapters Indigo, might try to get away with.

Then there is the matter of what drove McNally Robinson to bankruptcy in the first place. One publisher put it down to hubris.

It happened right after the first Christmas sales season in which Amazon’s Kindle ebook reader was the hottest gift, and the fresh hue and cry about the death of the book made it convenient to blame that new technology for their troubles.

But even Paul McNally now says that was a bunch of hogwash (he used the word meretricious).

"As a background to where independent bookselling is right now, it’s not a non-story to look at those trends," he said. "But this was a story of an expensive expansion where the timing was disastrous. There is a general climate that is glacial and there was a particular cliff I jumped off of."

He’s referring to their ill-advised Toronto store built in a new shopping centre with no traffic and opened just prior to the biggest economic downturn since the Great Depression.

McNally said concentrating on what they know how to do best in Winnipeg — without being distracted by prospects of risky riches elsewhere — means they will be able to do an even better job in Winnipeg.

"We know this is more than just a place to buy books in Winnipeg — it’s a real part of the community."

martin.cash@freepress.mb.ca