Business News HMV Timeline Retail

HMV scored profits of £16.7 million in year after administration

By | Published on Tuesday 30 September 2014

HMV Digital

HMV’s owner Hilco has shared a handful of boasts in recent months about how the high street music seller is recovering very nicely thank you very much since its collapse in January 2013. And now the Telegraph has been shown the company’s accounts, which are about to be filed with Companies House, and which report £16.7 million of operating profit on £311.2 million of sales. “An impressive turnaround”, says the broadsheet.

Of course, I think most of us knew that at the heart of HMV – the last man standing in mainstream high street entertainment retail – there was a profitable business. The problem was that the then publicly listed firm was saddled with about hundred loss making stores, an over-staffed HQ and distribution centre, and millions in debts, mainly stemming from an admirable but unsuccessful attempt to diversify the brand.

When HMV plc fell into administration, most of those weights were cut loose; loss-making stores were closed down, the over-manned HQ was downsized and the debts were written off. Hilco’s real genius was in buying out of administration the bit of HMV that was a going concern, while letting all the bad bits die.

Though that’s not to say Hilco hasn’t managed its new toy well in the first year since acquisition, maintaining a strict line on stores in danger of making a loss and taking a tough stance when negotiating rents on premises, but at the same time remaining outwardly upbeat.

A renewed focus on core music and movie products has pleased the labels and DVD publishers, and stepping up the in-store event programme has helped get more casual consumers back in store, while ensuring in a Google News search of HMV coverage of popstars dropping by outweighs local paper reports on closing stores here and there.

However, a pessimist might wonder whether any of this means the long-term future of HMV is assured. Mainstream CD and DVD sales are still ultimately in terminal decline, even if things have steadied a bit this year in the UK and HMV has upped its market share. And the new HMV is yet to do anything magnificent online – commercially speaking – it having withdrawn from mail-order and launched a decidedly lacklustre MP3 service.

Although, for a company that some had pegged for oblivion in late 2012, it seems that HMV will continue to sit on our high street and in our shopping centres for at least a few more years to come.