Internet retail rivals take a bite out of HMV profits
LONDON (Reuters) — Music and books retailer HMV said yesterday its annual profit more than halved to $48.1 million ($96.28 million) as it battled cut-price supermarket and online sales.The group, which runs Waterstone's bookstores as well as music shops under its own name, is battling price competition from supermarkets and online retailers as well as a decline in physical music markets as downloading takes hold.
The group said pretax profit before exceptional items for the year to April 28 plunged to $48.1m from $98.2m the year before. Sales rose 3.8 percent to $1.895 billion pounds.
A poll of 18 analysts by Reuters Estimates forecast median annual profit of $49.7m, while 17 forecast revenue of $1.9bn for the group which issued a profit warning in March but said in May it expected earnings to be in line with revised forecasts.
HMV said it plans to offer digital rights management-free downloads on its web-site from September, including EMI's and other independent label's libraries of over 1 million tracks. It also plans to sell its Japanese business.
HMV is facing mounting competition in its key UK-home market from supermarket giants like Tesco and Wal-Mart's Asda, as well as online retailers selling CDs and DVDs.
HMV said like-for-like sales in the eight weeks to June 23 had risen 3.8 percent.
"Group for like-for-like sales have been positive, allbeit against a soft comparisons as a result of last year's (soccer) World Cup. We have been growing faster than the market, gaining market share," chief executive Simon Fox told journalists.
Fox said the group has decided to sell its Japanese business but declined to comment further on value or timescale, adding the group had no intention of selling any other parts of the business.