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HMV announces wide-ranging review

By | Published on Wednesday 14 March 2007


Shares in London based HMV fell 16% yesterday after the music and books retailer issued a profit warning, confirming sales had deteriorated further this year and that annual profits would now be even lower than expected.

The announcement came at the same time as the launch of a “radical” review of the whole HMV business, which includes the HMV music stores and UK books retailer Waterstone’s. Admitting that both HMV and Waterstone’s had not responded quick enough to changes in the retail domain, and that that had hit the group’s financial performance, HMV CEO Simon Fox said: “Waterstone’s and HMV are great brands but have not adapted quickly enough to the way customers are now buying and consuming media. Our performance has suffered as a consequence”.

The revamp of the company will set out to save £40 million by 2010 by reviewing all aspects of the business, including its stores, supply chain and administrative operations. Poor performing stores are expected to be closed, though the specifics and timescales of those closures have not been revealed as yet. Certainly stores in the group’s books business that are deemed “surplus to requirements” following the Waterstone’s acquisition of rival book seller Ottakars will be among the first to go. The group will refurbish some of its stores, and revamp its online operations to enhance its e-tail experience, as well as including some social networking components to its website, aimed at music and film enthusiasts, cos if there’s one thing music and film enthusiasts need, it’s another social networking platform.

Although city types were cautious of what the big revamp will achieve in light of the group’s recent performance, HMV say it is confident its proposals will help improve performance, with Fox concluding: “The three-year transformation plan is exciting, radical and far-reaching”.