U.K. entertainment retailer HMV has benefited from the closure of rival Zavvi and the Woolworths retail chain, recording a year-on-year sales volume increase of 11.7% for the 16 weeks ending April 25, 2009.
During a conference call, HMV Group chief executive Simon Fox said that HMV U.K. & Ireland had been “working hard to take advantage of the opportunities arising from the changes to our competitive landscape” since Christmas. He added that HMV had enjoyed “double-digit volume growth in music and DVD as well as continued growth in games” over the last 16 weeks, while noting that the overall CD market was down between 5-10% this year.
“That [market decline] does reflect the exit of Zavvi and Woolworths from the market,” said Fox. “We clearly enjoyed large market share growth.”
Zavvi stores were gradually closed or sold off after the company went into administration in December, with HMV acquiring 23 sites, and the chain disappeared from the British high street in February. Woolworths closed its doors in January.
The full year results for HMV U.K. & Ireland for 2008-2009 show total sales growth of 6.3% on the previous year, and 1.9% like for like growth. The 16-weeks to April 25 results are up 11.7% on the same period last year, while the like for like growth is 4.3%.
Fox said that the CD market “remains under pressure” and he said that HMV has “built a 10% per annum decline into our plan.”
“That’s why we are diversifying,” said Fox, who said that games and technology are set to overtake music in sales in 2009. Games and technology currently account for 25% of sales, the same share as music, while DVDs have 50%.
HMV has previously announced a JV venue partnership with the MAMA Group, and today (April 29) it confirmed a partnership with mobile telecommunications operator Orange. The in-store concession partnership will enable Orange to offer mobile phones and services in an initial 15 HMV stores, with long-term potential for up to 100 stores.
Fox said the move reflects the fact that its customers “do enjoy increasingly entertainment on their mobile phone.”
He added that if the CD market does fall in the years ahead, HMV is ready to provide more floor space for gaming, including its pay-to-play scheme, and will explore other options such as its new cinema partnership with specialist independent film distributor Curzon Artificial Eye. The hmvcurzon partnership will be trialled in non-trading space in the Wimbledon store in the fall.
“We are really focused on opening our first one or two trial cinemas before we decide exactly the pace of rollout,” he said of the cinema partnership, predicting that around 20 stores could have the capability to operate cinemas within a few years.
Although Fox said he admires new digital services such as Spotify, he stressed that HMV is also in the digital music business and said that long-term viability is key. “Spotify and others are yet to be profitable,” he said. “Our focus is to be profitable.”
Overall, HMV Group (including international HMV stores and Waterstones’s bookshops) increased sales by 2.4% in 2008-2009 on the previous financial year, which was a 0.4% like for like increase.
Sales figures were not disclosed; preliminary financial results will be issued on June 30.
