According to the latest financial reports, 2011 looks like it might be a tough year for the entertainment retailer HMV. Yesterday the superstore was forced to review annual profit estimates for the year, after revealing sales figures over the Christmas period dropped by 13.6%. The news of the slump sent share and stock prices spiralling downwards by 24%.
Over a 13 month period shares in the retailer have fallen by 78%. A HMV spokesperson attributed the recent poor sales performance to difficult trading conditions and bad weather. In recent weeks the retailer also announced that the group was struggling to avoid breaching the terms of a bank loan. To ensure compliance with the loan conditions, HMV assured investors that mitigating actions were currently underway, including the closure of 60 or more branches and a further £10m worth of cost cutting measures.
2010 has been a particularly harsh year for retailers, especially those involved in traditional and digital media. The recessional headache mixed with poor consumer confidence has led to a nationwide drop in sales. Traditional retailers have had their problems further compounded by advances in information technology, piracy and competitive internet stores.
Despite the troubles within the group and a net debt of £151.6m, HMV announced sales in its Waterstone’s bookstores had improved, after efficiency measures were implemented last year. The Chief Executive for HMV, Simon Fox, stated: “The pace of change in the markets in which we operate underlines the urgency with which we must continue to transform this business.”
Image courtesy of the Daily Mail