HMV to announce profits of £74m

Steve Dinneen
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EMBATTLED retailer HMV is expected to post pre-tax profits of £74m in its full year results on Wednesday, boosting hopes the firm’s new management can turn around its fortunes.

It is understood HMV will hit estimates laid out earlier this year.

The music, film and games merchant has been torpedoed by the proliferation of digital versions of its products and its share price has plummeted in recent years. In 2005 the firm’s shares were valued at 274p – now they are worth less than 55p.

The group, which runs over 400 stores under its own name as well as 313 Waterstone’s bookstores, said in April its like-for-like sales slipped 13.2 per cent in the 16 weeks to 24 April.

But the retailer said it has benefited from better margins and tight cost control. It added that a strong summer release schedule should lead sales trends to improve.

It has seen a boost from blockbuster movie releases including sci-fi epic Avatar, Sherlock Holmes, Alice in Wonderland and Toy Story 3.

It also expects a strong music roster and the release of motion sensor hardware for the major games consoles to boost its revenue.

However, it isn’t all good news, and the general malaise surrounding the retail sector will weigh on the mind of new chief executive Simon Fox, especially in relation to the firm’s ability to honour its 7.4p shareholder payment at the end of the year.

The firm’s low share price has reportedly alerted a number of private equity sharks who are circling the firm in the hope of a further share collapse.