It has been widely reported that HMV Group commercial properties have had an incredibly tough few years. With fierce competition from internet competitors such as Amazon and Play.com, battles with financial backers and banks to try and eat into the debt accrued by the company, and difficulties paying stock providers at times, it seemed a fairly safe bet that the business would be following high street favourites such as the GAME Group and Woolworths into administration several times since the recession hit in 2008.
However, largely thanks to the tireless efforts of CEO Simon Fox, the Group has managed to keep its head above water, negotiating with lenders and selling off aspects of the company in order to pump funds into the future of the business.
The retailer has been a presence on British high streets for 91 years, with music fans flooding into stores nationwide to pick up the latest albums and music technology items on the market. However, with supermarkets now branching out into the Group’s niche, selling CDs, DVDs and Blu-Rays as well as iPods and speakers, it is no wonder the retailer has seen its customer base dwindling in the past few years.
This loss of custom is reflected in the Group’s full year results, which report on the annual financial status ending the 28th April 2012. Whilst losses were made in all areas across the board, certain categories improved on results from 2011, proving that the commercial property chain is, at least, taking steps towards recovery in a time of economic turmoil.
Like-for-like sales dropped 12.1 per cent from the previous year, perhaps reflecting the wider availability of music and films online. This had a knock on effect upon Group profits, with a pre-tax loss of £16.2 million (excluding exceptionals) – down from the Group’s performance last year, where it made £17.6 million in profit. However, this came as no great surprise, as guidelines issued by the company in May indicated that this was highly likely.
Sales also dropped by 19.7 per cent, with the total equalling £923.2 million. This compares unfavourably to 2011’s takings, which were £1,149.1 million for the financial year.
However, with extensive re-branding and selling of assets all having taken place in the past several months, as well as the replacement of CEO Simon Fox with ex-Jessops chief executive Trevor Moore. The Group made the decision to sell its Watersone’s book chain, music venue the Hammersmith Apollo and the Canadian arm of the company, as well as closing many unprofitable commercial properties.
Current CEO Simon Fox said; “The last year has been a difficult and challenging one for HMV and, as expected, this is reflected in our annual results.
“However, we are confident that the actions that we have taken will enable us to significantly improve cash generation and make profits of at least £10 million in the year ahead.
“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.”
HMV are now beginning to focus less on the ailing CD and DVD sales aspect of the business, devoting more attention to new technologies and live music.
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