Demise of rivals boost HMV profits

HMV has acquired a 50% stake in online music services company 7digital

Music and games group HMV has said the demise of rivals and benefits from its turnaround plan had boosted profits in a "difficult" retail climate.

The collapse of Woolworths and rival Zavvi late last year has helped HMV grow market share and it is "confident" over the current year.

The retailer has also upped the roll-out of its "next-generation" revamped stores, lifted online 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% ahead at £63 million, slightly ahead of consensus forecasts.

"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 said.

HMV grew like-for-like sales in the UK and Ireland by 1.9% 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 its focus on video games.

These now 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 also enjoyed a 16% sales increase, while the group has rolled out its purehmv loyalty card since the year end.

Music sales - accounting for 28% of revenues - were "more robust than anticipated".