Three years ago, when HMV took over Ottakar’s, opponents of the deal argued that it would create a Tesco of bookselling, leaving the retailer’s Waterstone’s chain the unchallenged high street specialist.

Today, Waterstone’s is looking more like Safeway than Tesco. Like-for-like and total sales fell over Christmas and last week’s pre-close update revealed a similar pattern. Waterstone’s total sales were down 3.4 per cent in the 16 weeks to April 25, when same store sales fell 4.5 per cent.

Book retailing generally has suffered a dry spell. WHSmith reported at last month’s interims that book like-for-likes were down 3 per cent and Amazon posted slower first-quarter growth at its international arm, including the UK. But it’s legitimate to ask the same question of Waterstone’s that is asked of retailers such as Kingfisher and Tesco. As a market leader, should it not be outperforming during a downturn? Waterstone’s boasts of the fact that 50 per cent of its sales are books outside the top 5,000 bestsellers. Surely then, it should be able to continue to appeal to readers – recession or no recession.

HMV’s eponymous business has been doing well and the retailer is complementing that with astute-looking joint ventures taking it into live music and film, but the same imagination is lacking at the books arm.

Waterstone’s is the junior partner in HMV, but it is still an important leg of the business. There will be no more Harry Potter sales magic, so it is up to the bookseller’s management to summon up some growth.

Right move for DSGi

To judge from the City reaction to DSGi’s rights issue and placing last week, you’d think the retailer was returning cash to shareholders rather than raising it.

The success of the fundraising is good news for DSGi and retailers more widely because it is indicative of renewed investor confidence in the stores sector. Now all DSGi has to do is see off the Best Buy Europe threat.