Waterstones’ slowing growth amid market contraction suggests the IPO will test investor appetite for traditional retail in an increasingly digital marketplace.

Waterstones’ sales momentum is waning as the chain prepares for a potential summer IPO, with annual growth slowing from 17% to 7% amid a declining UK book market.

The UK’s largest bookseller reported sales of £565.6 million for the 53-week period ending 3 May 2025, representing a 7% increase from the previous year’s £528.4 million.

However, on a like-for-like basis adjusting for the extra trading week, growth was just 5% – a significant deceleration from the previous year’s 17% surge.

Broader Market Headwinds

The slowdown reflects broader market headwinds. According to NielsenIQ BookScan’s Total Consumer Market data, UK print book volumes fell 2.5% to 190.6 million copies in 2025, nearly five million fewer than in 2024.

Market value remained essentially flat, declining 0.5% as higher average selling prices offset volume losses.

Waterstones’ expansion beyond books appears to be cushioning the blow, with the retailer noting growth in children’s educational toys and stationery alongside “particularly strong” fiction sales.

The chain opened seven new bookshops during the period, ending the year with 316 locations, while operating profit before exceptional items rose to £49.7 million from £45.6 million.

Pending IPO

The performance comes as parent company Elliott Investment Management prepares to take Waterstones and US sister chain Barnes & Noble public, with London expected to be the preferred listing venue. Sources suggest the IPO could occur in summer 2026 at the earliest, following Elliott’s April financial year-end.

Market conditions present challenges for the planned flotation. The UK book retail sector has declined at a 3.2% CAGR over five years to £1.1 billion in 2025, according to IBISWorld, with Amazon commanding over 50% of UK book sales. Fiction remains the standout performer – up 6% to £280.4 million in the first half of 2025 – but this follows 2024’s record performance.

James Daunt, who heads both chains, told the BBC that an IPO “feels like an inevitability and probably better than being flipped to the next private equity person.”

The combined business operates 775 shops in the US and 316 in the UK, generating approximately $400 million profit on $3 billion sales.

The View From The Beach

Waterstones’ slowing growth amid market contraction suggests the IPO will test investor appetite for traditional retail in an increasingly digital marketplace.

The chain’s diversification strategy and fiction strength provide some resilience, but volume declines across the industry indicate structural challenges remain.

This post first appeared in the TNPS LinkedIn newsletter.