HMV profits from demise of rival firms

ENTERTAINMENT retailer HMV yesterday reported an 11 per cent rise in annual pre-tax profits after stealing market share following the demise of its rivals.

The group, which also owns bookstore Waterstones, said pre-tax profits rose to £63m in the 12 months to 25 April compared to £56.6m in the same period last year. Total sales increased by 4.4 per cent to £1.9bn.

The HMV chain has gained significant share in the DVD and CD home entertainment market following the collapse of Woolworths and Zavvi. HMV has subsequently snapped up 25 Zavvi sites, taking the chain to a total 270 stores across UK & Ireland.

While HMV enjoyed a 1.9 per cent like-for-like sales rise due to a surge in gaming interest, Waterstone’s same store sales dipped by 3.8 per cent. The group said the whole book market contracted three per cent during the period, but it was hoping for a lift from Dan Brown’s latest fiction release later in the year.

Chief executive Simon Fox, who has steered the business through a three year plan, said the gaming side of the business had grown to 24 per cent, from just 14 per cent in April 2007.

Fox said: “At the end of the second year of our three-year transformation plan the group has delivered further profit growth, despite the challenging retail environment.”

HMV also witnessed a phenomenal jump in sales of Michael Jackson’s albums, recording 40,000 sales in the three days after his death.

The week-on-week increase has been larger than following the deaths of Elvis Presley in 1977 and John Lennon in 1980.

But the surge in demand is unlikely to affect HMV’s full-year performance, Fox said yesterday.