Leading British music merchant HMV Group plc today (Jan. 12) said its chief executive Alan Giles will retire at the end of 2006. In a separate interim trading note issued to the London Stock Exchange,
Leading British music merchant HMV Group plc today said its chief executive Alan Giles will retire at the end of 2006. In a separate interim trading note issued to the London Stock Exchange, the retailer reported a sharp decline in its first-half operating profit and slumping sales over the Christmas trading period.
In the 26 weeks ending Oct. 29, 2005, the group generated operating profit of £2.8 million ($4.94 million), down from £15.77 million ($27.82 million) in the corresponding period the previous year.
At the same time, total revenue slipped slightly to £759.7 million ($1.34 billion). That figure, notes HMV, was boosted by growth from new store openings. On a like-for-like basis, group sales declined 6.1% compared with the corresponding period in 2004.
"I think that drop in earnings is entirely down to our business in HMV U.K. & Ireland, where we saw a reduction in operating profit of nearly £14 million ($24.7 million)," comments Giles in an interview on the company's corporate Web site. During the period, he explains, HMV took one-off financial hits for the launch of its HMV Digital online music project, and the relocation of its Internet fulfilment facilities to Guernsey, part of the Channel Islands.
Despite an "improving trend" at Christmas, the five-week trading period ending Jan. 7 was another source of concern. Like-for-like group sales over the period shrank 2.7% vs the same period in 2004. The fourth quarter and Christmas typically accounts for the lion's share of HMV's annual figures. In 2005, Christmas Day landed on a Sunday, which allowed retailers the benefit of an entire week of trading prior to the holiday.
In a statement, HMV said Giles is poised to retire from the company after eight years to "pursue non-executive directorships." Giles will exit in December. He will be the second upper-echelon executive to retire within a year, following the official departure Dec. 31 of long-time group COO Brian McLaughlin.
Giles comments, "one of the things that I've been thinking about...is that eventually, I'd like to move on to more of a portfolio career -- to do some non-executive work. But I didn't want to do that until I was confident that we had a very well established, experienced and capable management team in place in all our businesses. I emphatically now feel that that's the case and hence the decision that I've announced today."
The company has also named Carl Symon as non-executive chairman, with effect from Feb. 1. U.S. national Symon is currently a director at listed companies British Telecom, Rolls Royce Group and Rexam. He succeeds David Kappler, who will remain a non-executive director.