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.
Finance Retail

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Is it favouritism to protect an employee no one likes?

The Dominic Cummings affair shows the dangers of double standards, but it’s also true that...

Masterclass: Communicating in a crisis

In this video, Moneypenny CEO Joanna Swash and Hill+Knowlton Strategies UK CEO Simon Whitehead discuss...

Remote working forever? No thanks

EKM's CEO Antony Chesworth has had no problems working from home, but he has no...

5 rules for work-at-home productivity

And how to focus when focusing feels impossible.

Scandal management lessons from Dominic Cummings

The PR industry offers its take on the PM’s svengali.

Why emails cause conflict

And what you can do about it.