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Financial Performance Review

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Financial Performance Review

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Ottarkar's plc Review

To Investors
Subject: Ottarkar's plc Financial Performance Review (2004-2005)

Ottakar's is one of the leading book retailers in the UK. It was founded in 1987 and listed on the London Stock Exchange in 1998. With its long experience in bookselling, Ottakar's tries to distinguish itself by offering extensive book ranges as well as excellent services to its customers across its 131 stores in England, Scotland and Wales. The company believes that it acquired 8% of total market share in the book market.

Overall, Ottakar's financial performance in 2005 was better than that of 2004 as a result of an impressive growth in book market stimulating by growing interest from customers. Beside that, the positive improvement in the company ranging from better buying discipline to changing in its departments such as financial and commercial department. These contributed to a considerable growth in sales performance and higher gross margin.

Profitability Ratios

Ottakar's achieved a strong growth in sales (turnover) at 12.7% to £173.2 million in 2005. (Like for like sales increased by 3.5% representing 2.4% of the growth of total sales) As can be seen from Gross profit margin, it increased from 42.19% in 2004 to 43.02% in 2005. The main reasons for this increase might result from higher sales revenue through the product mix from Hammicks stores coming into line with Ottakar's plc stores as well as the satisfactory performance of the new and refurbished stores that opened during the 52 weeks to 31 January 2004. Besides, the successful of "The Real Read" and "Ottakar's Originals"marketing campaigns contributed to impressive sales growth. In addition, a rise in sales might be generated from Costa Coffee concessions which Ottakar's plc introduced in its "Lifestyle" format stores. Ottakar's believes that there was a commercial compatibility of books and coffee and these lifestyle format stores represents 50% of Ottakar's total...