ABA Releases 2007 ABACUS Results

ABA member bookstores participating in the 2007 ABACUS Survey recently received their individual store reports and a $50 dues rebate check. Now, the American Booksellers Association is making the 2007 ABACUS Review (PDF format) available to all member booksellers via BookWeb.org.

Though this year's results again provide a powerful tool that booksellers can use to evaluate and improve their stores' financial performance, participation in the 2007 survey was down from previous years. "Total participation decreased significantly from 2006 to 2007, after increasing for three years," said ABA CEO Avin Mark Domnitz. "The decreased participation is of concern because the larger the sample size, the more reliable the data -- and this allows for a more in-depth analysis. To ensure the continued viability of the study, we will need more stores to participate in the 2008 ABACUS Survey when we begin collecting data this spring."

ABACUS 2007 is based on results for fiscal year 2006 from 186 businesses representing 243 locations and approximately $333 million in sales. Last year, 286 ABA member bookstores -- representing 317 locations and approximately $400 million in sales -- submitted data to the survey. Overall, ABA received 207 surveys for this year's study, but because 15 of these surveys were from stores with less than $100,000 in annual sales, they were excluded from the overall results.

"ABA welcomes and encourages the participation of these stores. They are on the frontlines of independent bookselling," Domnitz said. "However, their data tends to skew the overall survey results, so we provide them with their own personalized analysis while excluding their results from the general study."

ABA also excluded results from stores reporting numbers in major categories (e.g., Cost of Goods Sold) that were either so high or so low that they tended to skew the survey results in those categories and were therefore considered "outliers." The results from six stores were considered outliers in one or more categories, and were therefore excluded from the review.

Here's a look at some of the highlights of this year's survey:

• The survey shows a continued trend of declining net income, driven by increasing operating expenses. However, the decline in net income from 2005 to 2006 was far less severe than the decline from 2004 to 2005, primarily because increased operating expenses were largely offset by an improvement in gross profit margin.

• Although average net income for all stores participating in ABACUS has been negative for each of the past five years, 52 percent of responding stores showed an average profit of 3.81 percent. Meanwhile, 48 percent of participating stores showed an average loss of -7.28 percent, a profit gap of 11.09 percent between profitable and unprofitable stores.

• Compensation and occupancy continue to represent the two largest expenses for almost all the stores that participated in the survey. Reversing a multi-year trend, compensation expense declined significantly, but occupancy expense continues to increase.

• As in previous years, lower operating expenses seem to be a more important contributor to profitability than higher margin.

• As in previous years, most stores started to become profitable at around $500,000 in annual sales. Average net income peaked at 2.71 percent between $1 million and $1.5 million in sales and then started to decline, which is very consistent with the results from most of the previous ABACUS surveys. Average net income started to increase again above $5 million in sales. However, this is not consistent with the results of previous years' surveys and is probably attributable to a different mix of stores in this sales category, rather than a general trend of improving net income among larger stores.