City Paper is not for tourists
The next owners of Politics and Prose, the Chevy Chase bookstore and local literary institution, will be former Washington Post reporter Bradley Graham and his wife Lissa Muscatine, most recently the head speechwriter at the U.S. Department of State and a confidante of Bill and Hillary Clinton. The Washington Post reports that following a lengthy search, the bookstore’s current owners will complete the sale in the next 45 days.
Owners Carla Cohen and Barbara Meade decided to sell the store last year after Cohen, suffering from cancer of the bile ducts, became very ill. She died in October. Dozens of parties expressed interest, with one group including literary agent Raphael Sagalyn, former New Republic editor Franklin Foer, and Jeffrey Goldberg of The Atlantic, and another led by American University law professor Nicholas Kittrie.
Politics and Prose, known for its impressive slate of author events, has remained profitable amid tough times for brick-and-mortar booksellers. The Post article doesn’t say how much Graham and Muscatine are paying for the store. In his Washington City Paper cover story on the sale last fall, Tom Anderson offered an educated guess:
We did some back-of-the-envelope calculations for Politics and Prose. Our results represented an educated guess, at best: P&P is a closely held business and does not disclose all its financial information. Meade says Politics and Prose did more than $7 million in total sales for the past fiscal year, which ended in June. It’s conceivable that booksellers who are paragons of efficiency could pinch pennies enough to produce a gross profit margin of 15 percent, or $1.1 million per year if you round up. That’s a harder margin to maintain, though, when you’re paying salaries for the 55 experienced employees at Politics and Prose. Many bookstores sell for 15 percent of annual sales plus the value of their inventory as a rule of thumb, according to Jones. He estimates the inventory of a bookstore Politics and Prose’s size would range from $1.5 million to $1.8 million (large, specialized bookstores like P&P tend to keep more inventory around longer than the average indie bookseller). Under these projections, the store’s tangible assets may be worth nearly $3 million. No wonder Cohen and Meade received so many offers, probably for even less than the on-paper value of the business. People know a bargain when they see one.
But Politics and Prose also has “goodwill”—-what “accounting dorks call the price buyers pay for a business over and above the value of its tangible assets,” Anderson wrote. With its stature as an intellectual hub, its impressive readings, and reputation for knowledgeable booksellers, Politics and Prose is plenty rich in goodwill.
Photo by Darrow Montgomery