HMV Last Man Standing – US-FOREX.US
It’s grim on the British high street: demand has dropped sharply, consumers have moved online and many players have collapsed. But British retailer HMV, which runs music, DVD and video games shops under its own name as well as Waterstone’s bookstores, managed to beat market estimates for its annual results as it gained market share from collapsed U.K. retailers Zavvi and Woolsworths.HMV posted a profit before tax and one-off items of 63 million pounds in the year ended April 25, just ahead of analysts’ median forecast of 62 million pounds .But shares of HMV fell 2.5%, or 3.00 pence , to 115.75 pence in morning trading in London as investors concentrated on the long-term pressure of the business.Analysts at Nomura pointed out that HMV was still being challenged in international markets, and forecast a further deterioration in international trading, with EBIT for its international operations of 5.2 million pounds and an operating margin of just 2%.HMV international posted operating profits for the year of 6.4 million pounds , or 10% of its total operations. Although the company doesn’t provide a breakdown by regions, analysts at Nomura estimate 6 million pounds comes from its Canadian market and the rest from Hong Kong and Singapore, where HMV has around eight stores. HMV’s business in Canada faces a tougher decline in music sales and it is trying to increase its sales of games to offset help the decline, according to Nomura. Back on the British isles, same-store sales rose 1.9% at HMV stores in the U.K. and Ireland in the last year. Nomura expects the company to book a 5% gain in same-store sales this year after buying 25 outlets from Zavvi, a music and DVDs retailer that filed for bankruptcy protection earlier this year. In 2007 HMV also bought stores from specialist music chain Fopp when it went bust.
John Stevenson, an analyst with KBC Peel Hunt, said HMV could gain as much as 11.5% in sales this year following the collapse of rivals. The 88-year-old company kept its annual dividend at 7.4 pence a share.To offset the drop in demand, HMV successfully tapped shareholders for more cash last January to buy more stores and invest in live music and other ventures.
Thomson Reuters contributed to this article.