Music and games group HMV says the demise of rivals and benefits from its turnaround plan boosted profits in a difficult retail climate.
The collapse of Woolworths and rival Zavvi late last year helped HMV grow market share and it was confident about the current year.
The retailer has also upped the roll-out of its “next-generation” revamped stores, lifted on-line sales and is moving into the fast-growing live music market through a joint venture with venue operator MAMA Group.
HMV’s pre-tax profits for the year to April 25 were 11.5 per cent ahead at £63 million, slightly ahead of consensus forecasts. HMV said: “We are working hard to maximise both the market share opportunity, that has arisen from the withdrawal of competitors, and the investments that have been made over the last two years to improve performance.”
HMV grew like-for-like sales in the UK and Ireland by 1.9 per cent over the year, with a solid first half giving way to a much more difficult second period as the autumn’s financial crisis developed into recession.
But the firm reaped continued benefits from video games. These account for almost a quarter of HMV’s sales two years after chief executive Simon Fox shifted strategy to cope with competition from online music downloads and revive the chain’s stores.
A revamped website had a 16 per cent sales lift while it has rolled out its purehmv loyalty card since the year end. Music sales – accounting for 28 per cent of revenues – were “more robust than anticipated”.
Chief executive Simon Fox added that sales of Michael Jackson music had jumped 80 per cent following the death of the pop legend last week.
HMV also owns books chain Waterstone’s but the division suffered in a “challenging and highly-competitive” book market. Comparative sales at the 314-store chain fell three per cent even after adjusting for the previous year’s launch of the final Harry Potter book, with operating profits down 39 per cent to £10 million. The chain – which has noted weakening demand for celebrity autobiographies and travel books – did however increase its own loyalty scheme to 2.8 million customers, contributing to a 60 per cent rise in online sales.