Staff will be told about the redundancies this morning, according to The Guardian.
The HMV Group-owned books specialist operates 303 stores and employs 4,500 staff.
HMV Group will give a trading update this Thursday, when it will reveal Waterstone’s performance over the Christmas period.
Last month Waterstone’s posted a decline in like-for-likes of 3.1 per cent in the six months to the end of November. At the time HMV chief executive Simon Fox said sales of celebrity autobiographies were being hit particularly hard.
It is thought the job cuts are linked to a new centralised book distribution hub due to open in Burton-on-Trent, which will result in fewer staff being needed.
Waterstone's will be the latest retailer to cut jobs in the wake of the difficult climate. Others to have cut jobs include Marks & Spencer, Adams and Celebrations.