Ben Holgate hears Blackwell’s chief executive David Prescott’s vision of the firm’s future

The spartan decor in David Prescott’s office on the top floor of Blackwell’s flagship store in Broad Street is in stark contrast to the wood-panelled lower four levels to the basement that are crammed with thousands of books and rich with colourful displays.

The chief executive’s office is tiny, with barely enough room for his own small desk and a much smaller meeting table, and is situated beside a white-painted, open-plan workspace on the third floor where the rest of head office sits.

The frugal decor is indicative of Mr Prescott’s strategy since he was appointed chief executive two years ago: to slim down Blackwell’s from a loss-making, diversified bookseller with associated businesses into a leaner, profitable operation in the digital age.

Blackwell’s now appears to be on the cusp of a turnaround that is expected to result in a radical change in ownership of the institution that was founded by Benjamin Henry Blackwell in 1879.

If all goes to plan, Benjamin’s grandson, Toby Blackwell, the “lifelong president” and 85-year-old sole family member still involved in the business, as well as the majority shareholder with almost 100 per cent of shares on issue, will transfer ownership of Blackwell’s to the staff.

Mr Prescott said: “Before last year, we had not posted a profit for a long time.” He said the business “lost substantial amounts of money” in the previous decade, including £20m in its worst year.

However, a turnaround strategy initiated by Mr Prescott’s predecessor, Andrew Hutchings, is producing results. Blackwell Limited, the bookseller’s corporate entity, recorded a £0.6m operating profit in the financial year ending June 28, 2014, compared to a £2.8m operating loss in 2013 (although the 2014 result was bolstered by the release of £2.4m in provisions).

Turnover was £54.2m in 2014. Sales for the core bookshops and online business were flat year-on-year, meaning Blackwell’s outperformed the bookselling industry, which posted a 4.3 per cent decline in sales over the same period, according to the company’s financial accounts.

Blackwell’s closed its former head office in Hythe Bridge Street and relocated a smaller management team to Broad Street. Last year it exited its loss-making library services division, which mainly supplied books to libraries in the higher education sector in North America, Europe and Africa.

Mr Prescott expects staff will obtain ownership of Blackwell’s “in the next couple of years”.

“There are technical tests and assurances about the long-term sustainability of the business to answer before we can launch the partnership.” He added: “It’s a long-held ambition of Toby to put the business in the hands of people who will love and cherish it.”

Mr Blackwell talked publicly about staff ownership in 2009, citing the John Lewis partnership, which controls the eponymous department store chain and Waitrose supermarkets, as a model. But he had to wait for Blackwell’s to get out of the red. “We are in the process of developing the legal vehicles,” said Mr Prescott. “The business will be placed into the employee trust, owned equally by all the employees.”

Blackwell’s has 32 full-time stores across the UK, plus a further 35 temporary pop-up shops that are mostly situated on university campuses at the start of the academic year. Staff numbers fluctuate, but are usually about 550.

Blackwell’s has been predominantly a bookseller since selling its publishing arm in 2007 to rival publisher John Wiley.

Nottingham-born Mr Prescott, 43, who lives in Worcestershire, has built a career in retail. After completing a history and politics degree, he sold music at Virgin before joining Blackwell’s 20 years ago as a goods supervisor.

His time spent handling vinyl records at Virgin, before the advent of digital CDs, has put him in good stead navigating the technological disruption of the publishing industry caused by the Internet.

As vice-president of the Booksellers Association, he believes publishing’s trade side, fiction and non-fiction, “has been through that disruption curve and is starting to even out again”.

“Digital has settled at about 20 or 30 per cent of all sales in the UK. I don’t envisage it will go beyond that. Print is now starting to recover.”

He thinks this is partly due to people now being on their second or third e-reading device, and partly due to “a misnomer” that e-readers, such as Kindle, would somehow entice people who had not previously read printed books to suddenly consume books digitally.

Yet he acknowledges the publishing industry has many challenges, and that digital sales are expected to keep rising in academic and professional publishing.