HMV in upbeat mood despite loss

STRUGGLING HIGH street music and film retailer HMV yesterday said it expected to be back to black within months despite posting a £38.6m pre-tax loss for the year.

The loss for the 12 months to April 28 came as like-for-like sales fell by 12.1% following the most difficult trading period in the company’s history in which management were forced into a major restructure in order to stay afloat.

Following poor Christmas trading — the most important profit-driving period of the year — the company moved to change the nature of its relationship with its key suppliers with a view to materially improving group profitability and cash flows over the coming two years.

It also announced its intention to sell its HMV Live business, which runs a series of live music venues and festivals in the UK, but was forced to take a £37.1m write-down following an assessment of its current value.

However, the company said a deal completed this week to sell its flagship Hammersmith Apollo venue for £32m along with improvements in its financial structures meant it was making significant progress.

Total costs incurred through its restructuring in the past year was £11.1m, including £2.1m spent in the UK and Ireland on store closures and related redundancies.

Chief executive Simon Fox — who is leaving the business and will be replaced by former Jessops chief Trevor Moore on September 3 — said the firm was targeting profits of at least £10m in the next 12 months.

The company said that sales of entertainment devices such as computer tablets, MP3 and MP4 music and video players and gaming consoles would become the core focus.

“The last year has been a difficult and challenging one for HMV,” Mr Fox said.

“However, we are confident that the actions we have taken will enable us to significantly improve cash generation and make profits of at least £10m in the year ahead.

“Although we have clearly been through a turbulent period, our financial position is now stable.”

Chairman Philip Rowley said the group’s financial performance for the year had been disappointing but he was confident of improvement in the year ahead despite intense price competition from supermarkets and online retailers.

He said: “The group has come through another challenging year, but one in which it has proved that HMV justifies the support of key stakeholders such as suppliers, banks, employees and shareholders.”

“With this support a number of important hurdles have been surmounted.”

Shares in HMV ended the day down 0.1p at 3.6p