HMV charted a course back to profitability on Thursday as the veteran music retailer sharpens its focus on gadgets and gizmos.
The 91-year-old retailer – famous for its Nipper the dog trademark – has been shifting its emphasis from declining CD and DVD markets into the growth areas of new technology products, live music and event ticketing.
The group has closed underperforming stores and sold its Waterstones book chain and Canadian business. It was thrown a lifeline earlier this year when banks and suppliers came to its rescue, signing improved terms.
Results yesterday revealed a pre-tax loss before exceptionals of £16.2 million in the year to 28 April, compared with a similarly-sized profit a year earlier.
However, the group, which trades from some 250 stores in Britain and Ireland, employing about 4,500 staff, is confident of bouncing back into the black in the current financial year.
It is forecasting profits of at least £10m as it drives more business from selling the latest iPad, Google’s Nexus tablet and up-market headphones alongside core music and video.
Electronic devices now account for 11 per cent of the business after the firm rolled out an extended range to 144 stores. It plans to revamp a further 25 outlets over the coming months.
Chief executive Simon Fox, who will be replaced next month by Trevor Moore, the former boss of camera retailer Jessops, said: “The last year has been a difficult and challenging one and, as expected, this is
reflected in our annual results.
“Although we have clearly been through a turbulent period, our financial position is now stable thanks to the support of our suppliers, banks and colleagues, and I am confident, as I hand over the reins to Trevor Moore, that HMV has a secure future under his leadership.”
Fierce competition from online retailers such as Amazon and the explosion in digital downloading pushed like-for-like sales down by 12 per cent over the year.
Seymour Pierce analyst Kate Calvert remained unimpressed by the turnaround plans, saying the business has “potentially insurmountable structural issues”.
She added: “We remain concerned about the level of debt within the business and continue to believe there will be no let-up in the structural pressures from online or the supermarkets.”
The broker maintained its “sell” recommendation on HMV.
Following the sale of the Hammersmith Apollo for £32m, HMV is still looking to offload the remainder of its HMV Live business.
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