There's a story online this morning about how even the highly antiicipated release of the new Harry Potter opus from J.K. Rowling is not going to be enough to pull U.S. bookstores out of their financial slump.

I don't like hearing news that bookstores are in trouble, especially if local retailers are hurting. However if this "slump" takes down Borders or Barnes & Noble, I won't shed a tear, and I doubt many other people will.

I also think a huge part of the problem is that books are just too damn expensive. This new Potter book is listed at $29.99 which is criminal. When I was working at a bookstore in college, new hardbacks came out at $19.95. We're talking a 50% increase in price over about a 10 year period of time. Who can afford that? I certainly can't. Even if I had a real job.

Harry Potter Not Magic Enough for U.S. Bookstores

Wed June 11, 2003 06:21 PM ET
By Ellis Mnyandu NEW YORK (Reuters) - U.S. bookstores, facing weak sales and profits, will need more than just Harry Potter's wizardry to turn around their business as there is also concern that the book series may be starting to lose its magic among some fans.

At best, the June 21 launch of "Harry Potter and the Order of the Phoenix" would lure shoppers into bookstores so they can promote other items to bring relief from the market downturn, analysts said.

A recent survey conducted by J.P. Morgan, points out that some Harry Potter fans do not intend to buy the upcoming edition, possibly signaling that the latest J.K. Rowling installment may struggle to live up to its prelaunch hype.

"Based on our research, we do not believe that the release itself will be enough," J.P. Morgan analyst Danielle Fox said.

"To us, the biggest surprise from our survey is the fall-off in the intent to purchase (the new book) among existing Harry Potter fans," Fox said in a report entitled, "Harry Potter Survey: Do you believe in magic?."

Even though pre-orders of the latest Harry Potter have topped a million at online retailer Amazon.com Inc. -- as well as thousands more at other book chains like Barnes & Noble Inc. and Borders Group Inc. -- J.P. Morgan noted that the book was being heavily discounted, at times 40 percent off the list price of $29.99.

"In sum, we think heavy promotions will be crucial in making the latest Harry Potter release a success," said Fox.

She added that "consequently, we forecast modest gross margin compression for the book retailers in the second and third quarters."

"Our historical analysis shows that other factors, including (same-store sales growth comparisons) and the overall spending environment, will be key in producing a sustained sales and earnings per share lift."

Fox said in an effort to identify the impact that the new Harry Potter release will have on the book retailing industry, her company surveyed sixth and seventh grade children and their parents.

Roughly 32 respondents, or 91 percent of those surveyed, said they had previously purchased earlier Harry Potter books, but 16 percent of them also said they do not plan to buy the upcoming release, according to the J.P. Morgan report.

For bookstores, and even courier firms, every Harry Potter book, now in its 5th installment, has marked a feeding frenzy as businesses jostle to cash in on the action.

But this time around, getting a real boost from the new book's launch may prove elusive for hard-pressed booksellers, according to analysts. "Expectations have been built so high (for the new book) that one gets worried about how it will actually (do)," said William Blair analyst David Ricci.

Backed by a multimillion dollar marketing push, the new book boasts over 255,000 words, 38 chapters and about 896 pages, compared to its predecessor "Harry Potter and the Goblet of Fire" -- released in July 2000 -- with over 191.000 words, 37 chapters and 752 pages in hardcover.

The new book has a massive initial print-run, of which U.S. publisher Scholastic Corp. has earmarked an unprecedented 8.5 million copies for the United States alone.