HMV shares dropped nearly 17 per cent yesterday as poor trading figures laid bare the company’s failing turnaround plan.
The music, DVD, games and books retailer posted a worse-than-expected widening in first-half losses. Its share price dropped 16.57 per cent yesterday, to 36.50p
HMV made an underlying pre-tax loss of £41.3m for the six months to 23 October, compared with analyst forecasts for a loss of £38-39m, according to a company poll.
Sales fell six per cent to £749.5m, with sales at stores open over a year down 11.5 per cent.
Like-for-like sales at its Waterstone’s book chain fell by 3.2 per cent over the first half of its financial year.
Chief executive Simon Fox is battling to turn the business around as competition from downloads increases.
Fox said: “Our stores are ready (for Christmas). We have done everything we possibly can but if customers cannot get on to the high street it will be very serious for all retailers, including ourselves.”
He said the outcome for HMV’s year to the end of April would be largely determined by the next four weeks of the Christmas trading period which, together with the final four months of the year, account for 60 per cent of total sales. He is nervous that more extreme weather will further hamper seasonal sales.
The company has changed its strategy by concentrating on its live music venues, which
Fox believes can help it turn the corner.
Prior to yesterday’s update, HMV shares had lost 62 per cent of their value over the past year.
Chief executive Simon Fox has been at the helm of HMV for four years. A former executive at electricals giant Kesa, he has a strong pedigree in retail and is also a non-executive director of the Guardian Media Group.
His interest in the media, allied with his executive experience, made him one of the prime candidates for the chief executive spot at ITV when it became vacant earlier this year.
He was a frontrunner but pulled out of the race to concentrate on completing his turnaround plan at HMV.
Ironically, while the company has continued to struggle, ITV – under new chief Adam Crozier – has seen improving fortunes.
Fox graduated with an MA in economics from Cambridge University in 1982, and worked for Security Pacific Bank, Boston Consulting Group and Sandhurst Marketing in his early career.
He also founded Office World before joining Kingfisher in 1998. At HMV, his boldest move has been a partnership with live music venue operator MAMA, under which nightspots such as the Hammersmith Apollo have been rebranded with the HMV logo.
Fox is known for his laid back style, but retail experts say he has the backbone to make tough decisions.
Director general of the British Retail Consortium Stephen Roberston said of him: “He’s not as acerbic as other retailers, but there’s no doubting he has the steel to run a business like HMV”.