U.K. Entertainment Retail Giant HMV Swings to Full-Year Loss
But the company promises to return to profitability as it looks to divest more live music venues and grow its sales of entertainment devices.
LONDON - U.K. entertainment retail giant HMV on Thursday reported a loss for its latest fiscal year, but vowed to return to profitability in its current fiscal year as it looks to bounce back despite a still-weak economy and competitive pressures.
The company, which sells music, DVDs and other packaged media as well as electronic devices, said it "remains confident that it will return to profitability." HMV forecast pro forma profit before taxes for the current year to hit at least £10 million ($15.6 million).
The company also said it is continuing its strategic review of its remaining live music business and it is currently in preliminary discussions regarding potential further divestitures, which could help reduce the firm's debt.
Its focus will increasingly be on consumer electronics devices, HMV said Thursday. "The strategy of the company is to be the U.K.’s leading entertainment brand, offering our customers the best technology devices, products and services," it said. "Entertainment devices will grow to become the most significant part of our business. Our offer will be differentiated through the quality of our in-store experience and the digital entertainment content that will be bundled with devices."
However, HMV also emphasized: "Music, film and games will remain at the heart of our offer delivered in both physical and digital form and through increasingly deep partnerships with our suppliers."
In terms of its live music business, HMV earlier this year agreed to sell the Hammersmith Apollo venue, which has hosted the likes of Oasis, Queen, the Beatles and David Bowie, to a consortium that includes a unit of Philip Anschutz's Anschutz Entertainment. The live unit also includes 12 other event sites, including the Forum in London's Kentish Town and Camden's Jazz Cafe, and music festivals.
HMV swung to a loss before tax and exceptional items of £16.2 million ($25.3 million) for the fiscal year ended April 28, compared with a year-ago profit of £17.6 million ($27.5 million).
Pro forma revenue dropped 19.7 percent to £923.2 million ($1.44 billion), with like-for-like revenue down 12.1 percent. But HMV emphasized that a "strong increase in technology sales continues as we become a credible destination for an expanding range of entertainment devices, such as Google’s Nexus tablet."
HMV recently named Trevor Moore its new CEO as of Sept. 3.
“The last year has been a difficult and challenging one for HMV and, as expected, this is reflected in our annual results," outgoing CEO Simon Fox said. "However, we are confident that the actions we have taken will enable us to significantly improve cash generation and make profits of at least £10 million in the year ahead."
Added Fox: "Although we have clearly been through a turbulent period, our financial position is now stable thanks to the support of our suppliers, banks and colleagues, and I am confident, as I hand over the reins to Trevor Moore, that HMV has a secure future under his leadership."
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