HMV: Don’t Bet Your House On It
Outgoing HMV chief exec Simon Fox reckons he’s left the British retailer in a stable position but said he wouldn’t bet his house on it still being around in 10 years.
“That’s a big bet. I’m not betting my house on that,” he said in response to The Guardian asking whether he’d put his home on the troubled music chain being around for its centenary in 2021.
“HMV has travelled a long way but that doesn’t mean we don’t operate in tough markets,” he explained. “The last year has been a difficult and challenging one for HMV. However, we are confident that the actions we have taken will enable us to significantly improve cash generation and make profits of at least £10 million in the year ahead.”
During his six years at the helm, Fox tried to turn the retail chain into a 360-degree music company, a strategy that was led by the acquisition of Mama Group for a reported £65 million.
The problem was that revenues from its core business of selling CDs and DVDs plummeted, a situation that would have been much worse if its main competitors – such as Woolworths, Zavvi, Music Zone and even Andy’s Records – had survived the competition from legal and illegal downloads.
HMV’s apparent ability to outstay its rivals is still evident, as a recent spike in its computer games sales followed the demise of high street rival retailer Game.
Two years after Fox said he was turning HMV into “an entertainment superbrand,” the 360-degree strategy is in tatters and the live music businesses he acquired are on the block.
Although the initial intention wasn’t to acquire all of Mama, it now looks unlikely to be left with any of it.
Many analysts argue that HMV is a long way from being out of the woods.
Fox’s prediction of a £10 million profit in the coming year was made to look very bold by the announcement that HMV posted a pre-tax loss of £38.6 million for the year ending April 28. Like-for-like sales were down 12.1 percent.
There’s so far no real indication that the changes at the top, which have seen Fox replaced by Trevor Moore, former chief exec of photography chain Jessops, are cutting much ice with the stock market.
The shares have shifted from 3.45 pence to 3.50 pence in the two weeks since the announcement of Fox’s departure, settling down from an initial spike to 3.63 pence.