HMV’s First Half Losses Reveal Significant Financial Woes, Unclear Future for the UK Retailer
By Yannick LeJacq | December 19, 2011 | News | No comments | Share
HMV, one of the most popular retailers in the UK for digital entertainment, recently reported a weak financial performance in the first half of the current fiscal year. The report not only noted a decline in revenue from past years, but also significant losses year-over-year in the company’s recent history. In a statement to the press, the company expressed doubts over its continued viability, saying that while the they “have adequate resources to continue in operation for the foreseeable future,” current economic woes “may cast significant doubt on the Group’s ability to continue as a going concern in the future.”
Currently, the company owns and operates more than 250 stores across four countries. But recently, videogames have proved problematic for the struggling retailer. Earlier this year, they announced earlier this year that videogame sales in particular had “significantly underperformed.”
“This has been a challenging start to the year,” HMV chief executive Simon Fox stated. “However, we have taken decisive action to restructure the business and are now seeing the benefits of this, particularly in our technology products business.”
For the half year ended October 29, the company reported revenue of £364.9 million ($566.5 million), marking a 17.6 percent decrease compared to the previous fiscal year’s £442.7 million ($687.3 million). Losses increased substantially to to f £50.1 million ($77.8 million) compared to losses of £30.9 million ($50.0 million) year-over-year. The company is now carrying a net debt of £163.7 million ($254.2 million), an increase of over £10 million ($15.5 million) from last year’s fiscal performance.
It has not been an easy year for many game retailers the world over, with many companies announcing losses and pulling some awkward maneuvers to finagle their way around distribution rights and DRM. Fox is hoping that restructuring HMV’s business will help resuscitate sales and trading performance in the coming months, adding that ”Like all consumer-facing companies we are facing tough trading conditions but we continue to push forwards through this period. We remain well prepared for the key trading days ahead.”
