Ottakar's bookstore shelves stock system plan

Systems devleopment write-off likely to save costs pending competition ruling

Book retailer Ottakar’s has stopped development of a planned stock control system until the future of the firm is resolved.

The company is waiting for a review by the Competition Commission into a proposed acquisition by HMV Group, announced last September.

Ottakar’s finance director Michael Hitchcock says any decision to write off the system development costs will depend on whether further spending is right for the business.

‘I wasn’t prepared to commit to what would be the next instalment of the investment, which would only be thrown away if the bid goes through,’ he said.

‘We are not sure which way the Competition Commission will rule on the bid, so I am looking at all the expenditure I have made on the stock system to date.’

A decision on the likely requirements for the system is expected after the commission rules on the HMV bid in May.

‘We don’t have a stock system and the business needs one,’ said Hitchcock.

‘In 2004 we started to look at investing in a stock system. Having conducted a three-month review, I decided there were the grains of a system we could use and, through summer 2005, we continued to invest on the back of the money that had been spent the previous year.’

But work on the stock control system project is now on hold.

Ottakar’s is also suffering in competition with online rivals. The retailer’s Christmas trading figures released last week showed sales growth of 3.4 per cent, with like-for-like sales flat.

‘Despite some uplift in pre-Christmas week, Ottakar’s felt the effects of heavy discounting strategies adopted by major competitors, both online and offline,’ said a spokesman for the firm.