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.