HMV faces the music as profits slide 61%

The music retailer has just published more diabolical sales figures. And we're not entirely convinced its new plan to focus on portable technology will be a cure-all.

by Emma Haslett
Last Updated: 07 Mar 2013
Further depressing news for HMV’s long-suffering shareholders: the music retailer has published another set of miserable results, with like-for-like sales in the year to the end of April down by 14.5%, and profits before tax slumping 61% (from £74.2m last year, to just £29m this year). Ouch. Perhaps there’s a glimmer of hope, though: HMV has come up with a plan to get itself out of trouble, which seems to have worked in a small number of stores. Although whether it will work across the board is another matter entirely…

With DVD and music sales dropping harder than a Dead Prez bassline, HMV says its plan is to focus more on technology – specifically, items like headphones, speaker docks, MP3 players ‘and related accessories’. According to HMV, since it started selling it three years ago, ‘portable digital technology’ has come to comprise 8% of sales, worth £85m. It added that since it started devoting more space to this area in six of its stores during the final quarter of its year, ‘growth of over 100% in technology like-for-like sales has been delivered in these stores’. In other words: portable digital technology is bigger than hip-hop.

The plan now is to refocus another 150 stores towards its technology offerings in time for Christmas. And the good news is that it has a bit of cash to do it: having sold off Waterstone’s and its Canadian music retail business (both of which were doing better than the core business), it managed to agree on a refinancing deal with banks which gave it another £220m of breathing space. So while its situation is still pretty dire, at least that will keep the wolf from the door for a while yet.  

HMV’s shareholders aren’t the only ones concerned about the company’s plight. As legendary promoter Harvey Goldsmith put it at a summit hosted by MT and the CBI on Tuesday: ‘The parlous state of HMV is a worry to the entire industry. If it does go, Tesco will be the main outlet for recorded music – and that's just pitiful.’ Quite.
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