HMV to outline rescue plan in the UK
Beleaguered music and books retailer HMV will today outline details of a recovery plan in the UK as the group struggles amid increasing competition from supermarkets and online retailers.
HMV’s recently appointed chief executive Simon Fox, who took the reins at the group last July, will reveal the results of a strategic review designed to halt the firm’s decline in profits, which analysts are expecting to come in 35% less than in 2006 at £63.5m (€93m) when its full year results are unveiled later this year.
Mr Fox is forecast to announce sweeping changes at both the group’s Waterstone’s books division and HMV outlets, with speculation over store closures and job cuts.
Retail analyst Nick Bubb of Pali International predicts HMV’s turnaround strategy may involve introducing new product lines, such as toys, games and magazines, plus the possibility of customer loyalty cards and rewards.
A radical new format for HMV stores is also forecast as part of the overhaul to boost flagging sales.
HMV issued a profits warning at the beginning of the year, suggesting earnings for the 12 months to April were likely to be at the bottom end of expectations despite stronger than expected Christmas trading, with aggressive pricing pushing like-for-like sales 0.7% higher in the UK and Ireland.
It posted half-year losses of £31.8m (€47m) in its interim results compared with profits of £2.8m (€4m) for the same period a year earlier.
The firm, which also owns book chain Ottakar’s, has seen its share price fall by 33% in the past year, dropping below the 150p mark at the end of last year and only recently picking back up to sit at 152.5p.
The share price is still a long way off the 210p-a-share offer made for the company by private equity group Permira, rejected 12 months ago to the day today.
