HMV record stores report £17m operating profit 11 months after administration
HMV is staging a dramatic fightback, less than two years after it was saved from collapse.
Annual accounts seen by the Telegraph show that the high street chain racked up nearly £17m profit in the 11 months after it went into administration.
The retailer went under in January, 2013, with £170m of debts threatening the closure of 223 shops and the future of more than 4,000 jobs. Three months later, Hilco, an investment and restructuring firm, stepped in and saved the business and 140 stores.
Accounts for HMV Retail, due to be filed at Companies House, show that between January 29 and December 28 2013, the chain made £16.7m of operating profit on £311.2m of sales. The performance points to an impressive turnaround for a retailer that for decades stood at the forefront of the music and film industry but became obsolete in the face of competition from tech giants Amazon and Apple, and even the supermarket giants.
According to Hilco, every one of HMV’s stores is now profitable thanks to a large-scale restructuring programme. Debts and central overheads have been cut dramatically, and store leases and supplier terms renegotiated.
The retailer has paid out £10m in inter-company charges, £4m of one-off restructuring costs, and a further £2.3m in interest on related loans and working capital provided by Hilco. After one-off costs, HMV posted a pre-tax loss of £4.8m.
One of Hilco’s first moves was a deal to take HMV back to 363 Oxford Street, where it had started out in 1921. The company’s large store at the opposite end of Oxford Street was closed. The original venue pioneered in-store celebrity appearances and has begun staging gigs frequently again.
At the time, Hilco’s founder and HMV chairman Paul McGowan said: “This reflects HMV’s renewed focus on going back to its roots and getting the basics right.”
HMV, once part of EMI, has also rebuilt relationships with the major record labels and film studios. HMV offered to promote artists and films through special events and Universal, 20th Century Fox and Disney agreed, keen to see the chain survive to help prevent Amazon and the supermarkets from becoming more powerful and prices being slashed further.
Source: The Telegraph / Music week
Image source: The Guardian
