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HMV losses set to be higher than predicted
By CMU Editorial | Published on Tuesday 8 May 2012
HMV has warned investors that it is likely to record a pre-tax loss of £16 million for the last financial year, which ended on 28 Apr. That’s a higher loss than previously expected, with previous predictions pegging the flagging retailer’s losses at closer to £10 million. Year end net debt, however, is slightly lower than expected, at £168 million (£180 million had been forecast).
The entertainment retail firm blamed a “weak new release schedule” for its fourth quarter failing to live up to already pretty low expectations, which is the excuse the major labels always used to use for disappointing financial results before “we actually performed well in the context of the wider record industry as it battles with online piracy” became the standard get out.
Despite the disappointing year-end results, the retail firm’s management said it remained positive that its current strategy – including the much hyped headphones and gadgets push – will help turn things round within the next twelve months, so that the group could go back into profit in a year’s time. Analysts in the main were not so optimistic, though they too did reckon losses for 2012/3 should be less than in 2011/12.
Said HMV boss man Simon Fox: “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”.
As much previously reported, HMV is currently in the process of selling its profitable live division, the MAMA Group, as part of an ongoing bid to reduce the firm’s debt liabilities, much of which were run up by Fox’s previous diversification strategy.
As also previously reported, despite the wise logic of that diversification plan, it proved too costly to achieve as core high street revenues slumped, forcing management to refocus on the main HMV retail business, even though the future of any high street retail, let alone one based on physical gaming, movie and music product, remains pretty bleak. Still, the recent crash of the Game retail network, and resulting closure of many of its stores, may well bring some breathing space for HMV bosses as they continue in their bid to turn the ship around.
