HMV faces the music as sales slump

Sales at the struggling music retailer fell by 8.2% - although CEO Simon Fox reckons that's okay. Meanwhile, things are looking up for Blacks' staff.

by Emma Haslett
Last Updated: 06 Nov 2012
HMV has announced this morning that it’s had yet another diabolical Christmas - like-for-like sales dropped by 8.2%, as shoppers looked to cheaper deals elsewhere to get their CDs, DVDs and games. Its total drop in revenues - including store closures - was 16.9%. None of this comes as much of a surprise - after all, results it posted last month showed a loss of £32.4m in the six months to October, while shares plunged by more than 90% last year. So why is CEO Simon Fox so optimistic?

You know a company’s in a sorry state of affairs when results like this (particularly over Christmas) are seen as ‘broadly in line with expectations’. But Fox insists that if you take a closer look, the results are actually surprisingly encouraging. Sales at the 144 HMV stores that have undergone a facelift, focusing their offering more on technology, jumped by 51% (comparably) in the five weeks to the end of December, thus demonstrating that HMV’s rescue plan - to concentrate on sales of headphones and iPads, rather than CDs and DVDs - is working. So Fox isn’t entirely unjustified in saying that he’s ‘confident in HMV’s future prospects’.

That said, beyond ‘continuing to make good progress’, there was no word on what’s to become of HMV Live, the company’s live music operation, which operates 13 venues across the UK, including the Hammersmith Apollo and the Jazz Cafe in Camden. Like-for-like sales fell by 1%, which isn’t particularly encouraging. But by all accounts, potential buyers including Peter Dubens (the owner of Time Out Group) and Live Nation are straining at the leash to get their paws on the venues, so it wouldn’t be a difficult one for HMV to divest itself of.

This weekend saw encouraging events unfold at another struggling high street business, too: apparently, JD Sports is in ‘advanced talks’ to rescue beleaguered outdoor leisure chain Blacks. If the deal goes through, JD Sports will pay an estimated £20m to buy the company’s assets (which include 98 Blacks stores, 208 Millets shops and the Peter Storm and Eurohike brands) out of administration - which, considering the company is doing a ‘pre-pack’ administration, meaning its £36m debt will be wiped out, is a pretty good price. It should also mean that at least some of Blacks' staff will get to keep their jobs too...
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