HMV chiefs have reaffirmed their faith in the retailer after a terrible year, and set an operating margin target of between 3% and 4%.
The entertainment retailer, which over the last week has sold its Waterstone’s books chain and HMV Canada businesses, aims to reinvigorate its stores by expanding the range of portable digital products and extending live music and ticketing operations.
HMV’s group sales slid 7.4%, to £1.87bn and like-for-likes plunged 11%. Pro-forma pre-tax profit before exceptionals plummeted from £74.2m to £28.9m. However, after exceptionals and impairment charges HMV went from profit of £49.2m the previous year to a loss of £121.7m.
Chief executive Simon Fox insisted: “We have taken decisive action to restructure and successfully refinance the group.
“HMV remains a world-class entertainment brand, and we now have a very clear focus and strategy to drive cash generation and cost reduction, reinvigorate the customer offer and further diversify the Group into the growth areas of live, ticketing and digital”.
Following a six store pilot in which 25% of space was devoted to technology such as headphones and MP3 players, the retailer will roll the offer out to 150 more shops by Christmas. The pilot stores generated like-for-like sales 8% ahead of the rest of the chain.
HMV also intends to add to its stable of live music venues and increase its tickets business. The retailer said: “There is a significant opportunity to leverage our existing HMV Tickets platform to grow our share in the UK ticketing market, which has an estimated annual value of around £1bn.
“HMV’s access to a large and relevant entertainment customer base enables effective promotion of events to store and online customers, and this platform is also attractive to promoters of events at third-party venues.
“Our aspiration is to build a ticketing business that, over the medium term, will make a £3m to £4m operating profit contribution to HMV UK.”
Chairman Philip Rowley described last year as “unquestionably difficult and turbulent” but said: “Our group has been simplified and our strategic agenda is tightly focused. We must rebuild and do so quickly.
“At the heart of our business is a world-class entertainment brand, surrounded by high quality assets, dedicated people and the support of our business partners. With this strong underpinning, our urgent priority on behalf of all our stakeholders is to recreate value.”