Sales at HMV’s UK stores plummeted by 13.2pc on a like-for-like basis over its fourth quarter as bad weather, high comparative figures and less marketing activity knocked the music retailer’s performance.
Simon Fox, the chief executive under whom HMV had been enjoying a revival, said the business had seen a “difficult” fourth quarter. Like-for-like sales at HMV’s sister chain Waterstone’s fell by 4.8pc over the period, which covered the 16 weeks to April 24. Analysts expressed concern that HMV has lost market share in its core DVD and music categories over the period due to ongoing pressure from online retailers and supermarkets. Analysts at Credit Suisse described the statement as “disappointing”.
Mr Fox said: “HMV UK, as expected, had a difficult quarter and we planned accordingly by tightly managing margins and discretionary costs. However, the severe weather in early January and reduction in campaign activity in favour of preserving margin further impacted the like-for-like out-turn.”
Despite this, he said that pre-tax profit would be in line with expectations and “comfortably” ahead of last year. Over the year to April 24, group like-for-like sales fell by 4.3pc, excluding its live music division. Mr Fox said that the company is focused on its “new strategy to rapidly evolve HMV’s product mix, grow the new Live division and continue to turn around Waterstone’s”.
Credit Suisse noted that HMV makes most of its profit over Christmas so the update was less important than it could have been. However, it said: “We still feel the challenges HMV faces over the next three years are more difficult because there is no longer the benefit of capacity reduction within the UK, digitisation is starting to move at a more rapid rate across its key product markets of DVD and music and there is little visibility to its strategy that it can successfully replace its declining revenue streams.”