Woolworths Group today announced that it is looking to sell its dedicated music and video chain MVC. The news came as the British retailer unveiled a better-than-expected 4.7% rise in group profit bef
Woolworths Group plc announced today (March 23) that it is looking to sell off its dedicated music and video chain MVC. The news came as the British retailer unveiled a better-than-expected 4.7% rise in group profit before tax, goodwill and exceptional items to £73.1 million ($138.8 million) for the year to Jan. 29.
"The performance of MVC improved during the year," Woolworths says in a statement. "The board however has concluded that the investment required to reposition MVC is substantial and that the preferred option is to divest the business." MVC registered a 4.8% shortfall in comparable-store revenue during the year, Woolworths said.
In the meantime, the company will shutter its 14 worst-performing MVC outlets, leaving 67 stores to sell. The sale will take place in the coming months, Woolworths says.
Growth in the DVD market and a contract to supply all music to WH Smith U.K. retail stores helped Woolworths' wholesale distributor arm, Entertainment UK, to a 10% boost in revenue to £1.2 billion ($2.27 billion) for the financial year. Woolworths says "many opportunities exist to grow this business" in the months ahead.
Woolworths reports a 2.9% increase in group sales during the year to £2.9 billion ($5.5 billion). Net funds at year's end had more than doubled to £108.7 million ($206.5 million).
Looking ahead, the company admits that the future looks tough. "The retail trading environment is difficult, impacting both sales and margin," it said.
A first-quarter trading update will be presented June 7 at the retailer's annual meeting.
Woolworths Group demerged from former parent Kingfisher in August 2001. Private equity firm Apax Partners Worldwide has targeted the retailer for a takeover; Apax raised its initial proposal on Friday (March 18), valuing the company at £821.8 million ($1.6 billion). The U.K.'s Takeovers and Mergers panel has set a May 6 deadline for Apax to make a firm offer.