Entertainment group HMV’s shares were top of the pops last week as it flagged a likely return to profitability this financial year.

Entertainment group HMV’s shares were top of the pops last week as it flagged a likely return to profitability this financial year.

The retailer now expects to make pre-tax profits of at least £10m, compared with the loss previously expected by analysts of £5m.

HMV’s fortunes are looking up partly as a result of the problems suffered by rival Game, which went into administration. Although Game has since been bought, many of its stores were shut.

HMV also put its improved prospects down to “the changed nature” of its relationship with key suppliers – some of whom took equity in the retailer as part of a refinancing at the start of the year.

It’s still a case of jam tomorrow for HMV, however. News of the likely return to profit was accompanied by the disclosure that losses in the year just ended will be worse than expected. And like-for-likes remain dreadful – down 12.9% at the retail division in the 17 weeks to April 28.

HMV remains one of the retailers most at risk of the migration of sales online. But a combination of rivals’ difficulties, a shift into new product categories, supplier backing and sounder financial foundations will provide some respite and give it more time to reinvent itself.

Grocery competition hots up

The extent to which competition remains intense among the big grocers was highlighted by Morrisons’ latest update and the reaction to it. For the first time in almost seven years, Morrisons posted a like-for-like sales fall, testament both to harsh conditions for consumers and promotions by rivals.

At the time of Tesco’s profit warning after Christmas, the market leader’s prospects of successfully fighting back were downplayed by many observers.

Morrisons has been doing well, and the wheels haven’t fallen off the trolley. But Tesco is fighting back and Asda and Sainsbury’s are doing well. There is all still to play for.