HMV plays down impact of 80-fold surge in Jackson sales

Published on Tuesday 30 June 2009 21:36

MICHAEL Jackson's untimely demise is providing a sales boost for Britain's biggest music retailer, although the surge in demand is unlikely to affect HMV's full-year profit performance, the group yesterday admitted.

Chief executive Simon Fox revealed there had been an 80-fold jump in sales of Jackson's material on Friday, the day after news of the singer's death broke.

The week-on-week increase in Jackson sales was larger than surges following the deaths of Elvis Presley in 1977 and John Lennon in 1980, Fox added.

He revealed the Jackson sales surge as the retailer booked pre-tax profits of 63 million for the year to 25 April, up 11.5 per cent on a year earlier and in line with City forecasts.

HMV benefited from the collapse of former high street rivals Woolworths and Zavvi and efforts to turnaround the business including the roll-out of new-look "next-generation" stores.

The group, which runs music, DVD and video games shops under its own name as well as Waterstone's bookstores, grew like-for-like sales in the UK and Ireland by 1.9 per cent over the year, with a solid first half giving way to a much more difficult second period as the autumn's financial crisis developed into recession.

But the firm reaped benefits from its focus on video games. These now account for almost a quarter of HMV's sales two years after Fox shifted strategy to cope with competition from online music downloads and revive the chain's stores.

At Waterstone's, comparative sales slipped 3 per cent even after adjusting for the previous year's launch of the final Harry Potter installment, with operating profits down 39 per cent to 10m. The chain said it faced a "challenging and highly competitive" book market.

Overall, HMV group sales from continuing operations rose 4.4 per cent to 1.96 billion.

KBC Peel Hunt analyst John Stevenson believes the firm could achieve an 11.5 per cent sales lift this year, or "perhaps more", following the collapse of rivals, and that this should outweigh structural concerns about the decline of its core CDs market and growing competition from the internet.

David Stoddart, an analyst as Altium Securities, said HMV's moves into areas such as live music were "logical", but warned: "This does not lessen the threat to the high street estate from both online retailers and the supermarket majors."

The Jackson surge, which has seen his Number Ones album top the charts, is unlikely to impact on HMV's financial performance for the current financial year. Fox said: "Whether it's just a short burst we don't know. I don't think it will have a material affect on the business."