Full-year results for entertainment retailer HMV Group, published today, reveal a huge drop in both sales and profits as it a looks to reposition itself in the market.
Chairman for HMV Philip Rowley has put technology and digital products at the forefront of the company’s future whilst admitting that weak level of trading during this “difficult and turbulent” year had been “unprecedented”.
Pro forma profit before tax, which counts the disposed businesseses of Waterstone’s & HMV Canada as continuing operations for the full year, was £28.9 million which is a reduction of 61 per cent year-on-year.
This does not include the £28.7 million exceptional charge of refinancing which almost entirely nullifies all profits over the 12-month period.
Despite these rather bleak looking figures HMV believes that by changing its product mix and investing further in digital and live music operations it can turn trading around.
A trial increasing portable digital technology items in five outlets has proved successful and by Christmas 2011 around 150 HMV stores will dedicate a quarter of their floorspace to this product mix.
Rowley said: “Whilst we operate in rapidly changing markets, we believe that there is a clear place for HMV as a specialist retailer of entertainment products.
“By rebalancing the space in many of our stores away from declining categories to a focused range of high-growth technology products we will both enhance our offering to our customers and strengthen our sales base.
“In addition, as we evolve as a broader-based entertainment business, we see strong opportunities to combine under one format a focused range of portable digital products and accessories, visual, games and music and, increasingly, access to live and digital content.”
Like-for-like sales declined 11 per cent in the 53 weeks to April 30th 2011 and the particularly poor trading over the key festive period in December forced HMV to sell off its two subsidiaries in order to secure a refinancing package.
Net debt for the company now stands at £170.7 million, with a new £220 million banking facility to September 2013, and earning per share plummeted 67 per cent to 3.8p during the year.
Simon Fox, HMV CEO, added: “We have taken decisive action to restructure and successfully refinance the group.
“HMV remains a world-class entertainment brand, and we now have a very clear focus and strategy to drive cash generation and cost reduction, reinvigorate the customer offer and further diversify the group into the growth areas of live, ticketing and digital.”