British labels are staging a candlelight vigil on this one, but HMV might not make it through the night.
On Thursday, the heavily brick-n-mortar retailer posted annualized, after-tax losses of nearly $200 million, or 123.1 million pounds. That is a huge swing from a year-ago gain of 49.2 million pounds, or $79 million in dollar-speak.
It also follows a period of store closures and divestitures, most notably the sale of Waterstone’s book unit. Some costs related to those dump-offs adversely affected the profitability picture.
Either way, the broader backdrop has been brutal. “Our operating and financial performance this year has evidently been both disappointing and unsatisfactory,” chairman Philip Rowley told investors, offering a level of honesty frequently absent among American executives.
But there are plays and opportunities to consider, and the HMV product mix started shifting years ago. Looking ahead, the company is pushing greater diversifications towards headphones, portable MP3 players, and anything that doesn’t start with a ‘C’ and end with a ‘D’. In-store ticketing will also be ramped upward, another music-related expansion that could pay dividends. “We now have a very clear focus and strategy to drive cash generation and cost reduction, reinvigorate the customer offer and further diversify the Group into the growth areas of live, ticketing and digital,” relayed HMV chief Simon Fox.
But is it too late?