HMV on the brink?

The HMV group is in serious trouble and looks more or less doomed. I cannot remember the last time I walked into a music store and bought any CDs or DVDs. Just occasionally I dip into and out of Waterstone’s - part of the HMC business. But the dominance of the internet is now so well entrenched that it is difficult to see how retail stores with expensive rents can maintain profitability? This BBC report flags up growing losses for HMV. And this article from the Guardian does a good job in explaining why times are so tough for bricks and mortar games, video and entertainment retailers these days.

Their share price is down a fifth this afternoon after the release of some stunningly bad figures. Like-for-like sales at Waterstone’s book chain fell by 3.2pc over the first half of its financial year, while sales at the HMV chain fell 16.1pc. Pre-tax losses widened to £41.3m from £24.9m last year, their debt has doubled and the dividend has halved. HMV is looking for salvation from a move into live music and other live events - it acquired 12 live music venues back in January when it bought the MAMA music group. And in a bid to pare down debts they are selling one of their two flagship Oxford Street stores for more than £12 million.

It may be too little too late - shoppers wandering into an HMV store might be forgiven for singing “are you Woolworths in disguise?” since HMV will try to sell you just about anything these days including iPads! The likely scenario is tat their share price will continue to tumble until a buyer comes in, and takes the business off the stock market before attempting to scale down the business and target live events and web sales. Selling high volumes of music CDs and DVDs is just too expensive these days.