Entertainment retailer HMV has today predicted that its full-year losses will be greater than previously anticipated due to a lack of big music & film releases in its fourth quarter.
Reporting its pre-close update the beleaguered business said that it now predicts losses for the 52 week period ending April 28th 2012 to total £16 million but its net debt should stand at approximately £168 million – an improvement on previous forecasts.
HMV cut its store portfolio by around 30 shops last year and has shifted its product focus towards consumer technologies in an attempt to stem the loss of sales caused by the migration of media spending towards digital downloads and online competitors.
The final 17 weeks of its financial year saw like-for-like (LFL) retail sales fall 12.9 per cent year-on-year, a worse performance than across the full 52 weeks where LFLs dropped 11.7 per cent, with the retailer blaming a weak new release schedule in CDs & DVDs for the Q4 slump.
Simon Fox, CEO of HMV, commented: “The last year has been a difficult and challenging one for HMV and this will be reflected in our annual results.
“However we are confident that the actions we have taken will enable us to significantly improve our profit and cash generation in the year ahead.”
For the 2012/13 period analysts are expecting HMV to cut its loss-before-tax to just £5 million thanks to a renegotiation of it relationship with its key suppliers, further cost cutting and the expected sale of its concert & events division HMV Live.
The trader has also claimed that its market share in it core product categories has grown in recent weeks, however Neil Saunders, Managing Director of retail analyst group Conlumino, is pessimistic that HMV can achieve it turnaround and instead expects the retailer’s future to be “one of managed decline.”
“The bottom line is that digital will do to physical music stores what motorisation did to the blacksmith’s forge,” Saunders added.
“Admittedly, HMV is trying to make itself more relevant through the introduction of technology into stores.
“In our view, this is tinkering around the edges and does not constitute a sound plan for survival. Technology sales are rapidly moving online and competition on the high street is already tough.”