Business News HMV Timeline Retail

HMV sees sales and profits rise

By | Published on Wednesday 30 June 2010

Given some City types were still feeling gloomy towards HMV as recently as yesterday, the fact the music firm’s full year financials, released this morning, show a sales increase of 3.1%, taking sales to a record Ł2 billion last year, are pretty impressive. Profits were up 17.7% to Ł74.2 million for the financial year up to 24 Apr.

Gloom merchants might point out that sales at existing HMV stores were down 2.4% (ie the overall increase in the firm’s music store revenues was partly down to the number of shops increasing last year) and that the company’s books business Waterstones saw sales slump 6.2%. But the bigger picture is brighter, even more so when you consider HMV has dramatically diversified in the last 12 months, not least through its acquisition of the buoyant MAMA Group.

HMV boss Simon Fox, who said his company’s overall performance was “pleasing”, added that while diversification was in part securing the firm’s future, he and his team were also busy turning round the fortunes of the company’s more traditional high street operations, especially at Waterstones where new management has been put in place.

As previously reported, some commentators – us included – reckon a lot of City types are currently undervaluing the wider HMV group, which has benefited greatly from the demise of its old rivals Woolworths and Zavvi/Virgin Megastore, and which is now operating in some of the most profitable parts of the music business via its MAMA division. Some reckon that undervaluation by many analysts might, if it were to continue, make HMV a target for a private equity takeover.