Profits rise, expansion to continue.
The stock market reacted positively to annual figures published today (June 28) from London-based HMV Group plc which show the retail giant's sales for the year ended April 30 rose to £1.88 billion ($3.40 billion).
The figures were released on the same day that the group announced the delayed retirement of its COO Brian McLaughlin, a 36-year company veteran.
The group's sales total is for the 53 weeks ended April 30; the group's previous financial year ended April 24, 2004. On a comparative 52-week basis eliminating the final week, the chain's 2004/2005 sales totalled £1.86 billion ($3.37 billion), a 3.8% rise on 2003/2004; operating profit was £137.5 million ($248.9 million), up 4.5%.
The group's underlying debt was reduced during the year by £40.5 million ($73.3 million) to £17.3 million ($31.3 million).
HMV's share-price closed at 236.75 pence ($4.29), up 3.16% on the opening price.
The results show the resilience of HMV Group's specialist retail formats, suggests CEO Alan Giles. "Trading conditions, chiefly in the United Kingdom, are tough for all High Street retailers," he tells Billboard.biz. "But within that context, we are more than holding our own; indeed at HMV itself we're gaining significant market share. We feel well positioned for a return in consumer confidence when that comes."
On a 52-week basis, like-for-like sales at the group's HMV U.K. & Ireland powerhouse showed zero growth. With new store openings included, sales rose 6% to £986 million ($1.78 billion). Operating profit rose 1.3% to £96.8 million ($175 million) on the 52-week basis.
However, Giles says the flat trading will not slow down the pace of store openings. "In the United Kingdom," he insists, "we're well on track to open more stores than last year, when we opened 23. This [financial year], we should open 25."
HMV is also planning to launch a new online music store, HMV Digital on Sept. 5.
The group will also open "between 5 and 10" Waterstone's bookstores in the United Kingdom, Giles says.
HMV Asia Pacific will open another five or six stores in Japan, down on the eight it opened in 2003/2004. "The Australian market is still difficult," admits Giles, "but conversely, Hong Kong has been very good." The division saw sales drop 1% over 52 weeks to £280.9 million ($508.4 million), and operating profit fell 7.4% to £7 million ($12.7 million). "The music market in Japan remains tough," says Giles, "but there have been better releases in recent weeks, and we are allocating more space to DVD, much as we did in Canada."
Giles says that HMV Canada's business has "improved so much that we're back on the expansion trail." The chain will open seven new stores before Christmas 2005, he says.
HMV Canada is indicated in the annual report as HMV North America. Operating profit there rose 217% to £7.6 million ($13.8 million) on a 52-week basis, aided by the closure of the group's loss-making U.S. stores.
Along with the financial results, HMV Group confirmed that London-based McLaughlin, 55, would retire Dec. 31, 2005, one year later than originally planned. He had announced May 2004 that he would step down effective Dec. 31 2004. However, in October that year he agreed to stay and took additional responsibilities as acting managing director of Waterstone's.
As originally planned, he will take a non-executive director role at HMV alongside his chairmanship of the Nordoff Robbins Music Therapy charity.
McLaughlin will not be replaced as COO, but HMV U.K. & Ireland managing director Steve Knott will join HMV Group's board Aug. 1. A new managing director is being sought for Waterstone's.