HMV’s new boss Trevor Moore has insisted there is a demand for a high street entertainment retailer despite HMV warning that it may breach its banking covenant at the end of January.
HMV faces a nail-biting Christmas period as it fights to stave off a breach of its banking agreements after posting a like-for-like decline of 10.2% in the 26 weeks ended October 27.
Moore told Retail Week: “It’s a really difficult market. It was hard over the summer with the Olympics, Paralympics and the Jubilee. People staying away from stores was a challenge for us.”
But he insisted there is a place for HMV on the high street. “We’re the first-choice destination for entertainment,” he said.
“We’ve been around for over 90 years. We get 170 million visits to our stores a year. More than 60% of the population visit us at some point in the year, and shop with us.
“And we’re suppliers’ best route to market. Where are people going to go for their stocking fillers? You can’t unwrap a download.”
Moore said the retailer’s top priority is to “drive footfall into stores and to convert that profitability”.
He added: “We’ve got to reverse this decline in sales to get this business into growth, but not at the compromise of margin. We need a sales-led recovery.”
Moore also said it was critical to “maximise the opportunity of Christmas”. The retailer makes around 46% of its sales in the third quarter, which includes Christmas.
He said the release schedule so far had performed below expectations. “The big releases have not got the traction we would have hoped for. But our market share is growing in music, visual and games. We’re becoming a bigger part of the market.”
He said he has “initiated a comprehensive review of the group’s cost base” to better reflect the size of the business. “Looking back two years, HMV was a much more complicated business, with Waterstones and the international business. Is the cost base relevant today?”
Moore declined to say whether or not the review could result in any job losses.
Under Moore’s stewardship HMV has focused on improving store standards, including better management of queues, investment in training and a new uniform. Moore has also begun a staff incentivisation programme to boost store standards.
The retailer has also been working closely with its suppliers, which Moore said remained supportive of HMV. “We have strong, productive communications with suppliers,” he said.
Moore maintained that the strategy of focusing on technology products to lead the turnaround was still the right one, despite reporting a worse than expected performance in the category.
“We remain convinced that technology is an important part of the offer,” he said. “There are still people doing it well on the high street such as John Lewis. There’s a big opportunity for us in relevant technology, such as tablets, iPods, and headphones.”
He added that HMV was looking at going into more entertainment-related categories in the long term. “We should be looking at how to complement the offer,” he said. “We’re determined to create a business that delivers a proposition that customers can engage with.”
Moore is set to reveal his full strategy in 2013, and declined to say if there would be a major shift in strategy.
He added that in the 13 weeks since he joined there have been “no surprises”. He said the challenges he recognised before he joined are the same challenges he has found since taking the helm.