HMV looks forward to happy Christmas after profits pick up
HMV met forecasts with an 18 per cent rise in yearly profit and said its plan to transform the business into an entertainment brand was working.
The music, games and DVD group, which runs over 400 stores under its own name as well as 314 Waterstone’s bookstores, made an underlying pretax profit of £74.2m for the year to 24 April. The group said that Christmas would be the stage at which the company’s turnaround would be proven beyond doubt for potential investors.
HMV faces the same competition from supermarkets, online retailers and digital downloading that caused rivals Woolworths, Zavvi and Borders UK to fall during the recession.
It has responded by cutting costs and widening its focus, targeting earnings growth by increasing sales of new products and raising its presence in live music and ticketing.
Group sales rose 3.1 per cent to £2.02bn. However, sales at HMV UK and Ireland stores open over a year were down 2.4 per cent, while like-for-like sales at Waterstone’s fell 6.2 per cent.
Chief executive Simon Fox said: “Our strategy is on track but it will be the Christmas period when we prove that. There are doubters out there but I do believe our share price – up 6p at 63p – is dramatically undervalued.”