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HMV publishes gloomy figures, set for first ever year end loss
By CMU Editorial | Published on Monday 19 December 2011
More gloomy numbers are coming out of HMV today, which seems set to report its first ever annual loss, or at least that’s what most analysts are now predicting based on the entertainment retailer’s half-year figures.
Sales are down 17.6% so far this year, and 13.2% year on year in the last seven weeks, the most important part of the year for any retailer. And, while a statement insisted that the company still enjoys the support of its bankers and has adequate resources to continue trading for the foreseeable future, it admitted that “the economic environment and trading circumstances create material uncertainties which may cast significant doubt on the group’s ability to continue as a going concern [long term]”.
Gloomy reading indeed. Having sold off both its Waterstones chain and Canadian division to raise funds earlier this year, speculation is now rising that HMV boss Simon Fox may be forced to sell off some of the assets he bought, when first in the CEO’s chair, as part of his original plan to rescue the retail firm by diversifying its operations. As previously reported, it has already been speculated that might include selling HMV’s 50% stake in 7Digital, while today’s report admitted a strategic review of the HMV Live division – aka the MAMA Group – is under way, which might lead to a sale.
It’s thought HMV execs will meet with key suppliers today to keep them on side despite the gloomy financials. Bosses are likely to stress the good performance of the big Christmas bestsellers, DVDs in particular, and the potential of Fox’s grand plan to sell more gadgets through the HMV shops (which is certainly good for turnover if not profit).
Of course, despite widespread concerns about the future of the HMV empire, its key suppliers will remain supportive to an extent, the major record companies in particular recognising HMV stores are their last big presence on the high street. Some have even speculated Universal might step in to buy the company, though that does seem unlikely, especially given Universal’s ongoing EMI purchase.
But what are the City types making of all this. Well, analysts have been down on retail, and especially entertainment retail, for ages now, and see announcements like this as verification of those concerns. Philip Dorgan of investment bank Panmure Gordon told the Telegraph: “It’s not looking too good for HMV. It’s a shame because the staff are doing a good job, but they have been dealt a terrible hand. They are being picked off by the supermarkets and the internet. Anything you can buy from HMV you can buy cheaper or more conveniently elsewhere. It is high up on my list of [potential] Christmas casualties”.
