HMV will start selling MP3 players and DAB radios and offer digital downloads in-store as part of recovery plans to buoy the ailing business. The music and book retail group says changes in music retailing have been “more severe than predicted” as it announces profits have halved in 12 months.
The struggling company, which also owns the Waterstone’s brand, made pre-tax profits of £48.1m before exceptional items in the year to 28 April, down from £98.2m a year ago. However, like-for-like sales grew by 3.8% to £1.9bn in the eight weeks to June 23.
Unveiling the annual figures, chief executive Simon Fox says: “Our markets are changing profoundly.”
He adds: “Entertainment is being generated and consumed in entirely different ways putting pressure on traditional retail space and traffic.”
The group is trying to reduce its dependence on the sale of physical music such as CDs by offering digital downloads in-store and expanding its online business, tapping in on trends such as social networking. HMV will also start selling MP3 players and DAB radios, while mobile operator 3 will open concessions in some of its stores.
The group also faces similar difficulties at its book chains Waterstone’s and Ottakar’s. Competition from supermarkets and sites such as meant Waterstone’s like-for-like sales fell 4.1%, despite the UK book market overall growing by 2.1%, HMV said.