HMV puts spotlight on live venues in reshaped strategy

HMV Group is to turn up the volume on live music, festivals and computer games as it positions itself to weather changes on the high street.

Unveiling its latest business strategy yesterday, the retail giant also pledged a turnaround of its Waterstone's bookstore business, which traded poorly over the festive period.

Group chief executive Simon Fox told investors: "Having rebuilt profitability over the last three years, we have a clear strategy to continue the transformation of the group."

HMV is looking to diversify its traditional businesses in the face of a tougher consumer backdrop and competition from online retailers and music downloading services.

It hopes that new products such as entertainment-related fashion will rise from 9 per cent of sales to 21 per cent by 2013 under the plans.

The company has also moved into live music with the acquisition of Mama Group earlier this year, handing it 11 music venues, including the Edinburgh Picture House and Aberdeen's The Warehouse, and an interest in events such as London's Lovebox festival.

HMV now plans to add two to three new venues a year, while it has also launched events for this year like the Next Big Thing festival at Mama venues and the High Voltage rock festival.

The group, which runs 420 stores under the HMV banner as well as 313 Waterstone's branches, expects the total live music market to be about a third larger than recorded music by 2012 and is targeting underlying profits of 15 million in this area in 2012-13.

At Waterstone's – which has struggled amid the recession and poor sales of usually lucrative big name autobiographies – the goal is to increase non-book sales from 6 per cent to 10 per cent in the next three years.

The plans will see more stationery and gifts on the bookseller's shelves as it looks to capitalise on its position as "the last remaining specialist bookseller on the high street" after the collapse of rival Borders late last year.

HMV is targeting a further 25m of savings by 2012-13, including 10m in 2010-11. These savings are expected to offset underlying cost inflation to give broadly flat like-for-like costs over the next three years.

The retailer added that by 2013 it expected to be debt free despite anticipated capital expenditure of 40m a year.

Waterstone's is under the new leadership of Dominic Myers after the group branded its Christmas performance as "unsatisfactory".

The book chain saw its like-for-like sales slump 8.5 per cent in the five weeks to 2 January, as it suffered from the weakness in the high street book market.

The new strategy is aimed at revitalising the brand and will include tailoring its offer to local markets and improving availability.

In addition, HMV plans a new e-book store as it also looks to enhance its website.