HMV confident on return to profit

HMV is confident that changes to its business strategy, including a focus on technology, digital and games, will mean a return to profit next year, despite continued losses this year.

HMV

The entertainment chain expects pre tax profit of around £10m for 2012/13, while analysts expect a loss of around £5m.

It made a bigger than expected loss of £16m last year, which HMV says reflects a weak schedule of new release albums and DVDs.

Sales at stores open for more than a year fell 12.9% in the three months to 28 April.

Progress in its strategy to boost its sales of technology and electrical alongside music and film content has given “encouraging” market share growth in recent weeks, according to CEO Simon Fox.

HMV also hopes to capitalise on the disruption to rival Game and increase its share  of the gaming market. It has already ramped up marketing in this space to attract customers from its rival.

Efforts to improve its digital business and grow in the games arena have already started to pay off, as the latest figures form Kantar Worldpanel show HMV increasing its share of the entertainment market by 1.7% to 19.2% in the three months to 18 March. In the same period, Amazon, which holds the top spot, lost 2.5% of market share to 19.9%

A review of its HMV’s Live business, which includes music venues and festivals, is ongoing and the division may still be sold.

Chief executive Simon Fox says: “The last year has been a difficult and challenging one for HMV and this will be reflected in our annual results. However, we are confident that the actions we have taken will enable us to significantly improve our profit and cash generation in the year ahead.”

Separately HMV has launched a campaign to mark the Queen’s Diamond Jubilee by inviting music fans to vote for the best British album and film of the last 60 years. The Facebook app will be supported in store and customers can win the Top 60 albums and films.

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