HMV CEO Simon Fox must be wishing he’d taken the ITV CEO job when it was being dangled under his nose a couple of years ago. But while eventual choice Adam Crozier is basking in ITV’s resurgence, Fox is reporting slumping sales and profits and coping with the real prospect of HMV, a pillar of the British High Street for decades, being this year’s retail sacrificial lamb.
Fox is still expected to report a 2010 profit at HMV, although closer to £40m than the £60m it hoped for. But sales in the company’s record stores were down 13 per cent over Christmas although its bookshop chain Waterstone’s managed to match 2009’s not very inspiring figures.
Fox will blame the weather of course and, to a (chilly) degree he has a point. HMV sales and profits are sharply skewed to Christmas and depend heavily on the generations that used to frequent record shops popping in to buy CDs and videos for their younger friends and relatives, who get most of what they really want off the net. Lousy weather is going to make these not very essential shopping trips even less attractive.
But the writing is on the wall for HMV and its diversification into live music venues with Mama Group back in 2009 has not proved the saviour it hoped. High ticket prices are having an effect on audiences and, in terms of prosperous London, its Hammersmith Apollo (now the HMV Apollo) is very much second best to the O2.
So Fox is going to close 60 stores in a last-ditch effort to appease his bankers. But they will reason that, if HMV can’t pull in the punters over Christmas 2010, it has absolutely no chance in the first ten months of cash-strapped 2011.
Will HMV (founded in 1921) follow in the footsteps of the equally venerable Woolworth which collapsed in November 2008?
Despite his current misfortunes Fox is a good manager and he’ll have a Plan B which may involve selling off the shops piecemeal to other retailers and Waterstone’s to, possibly, founder Tim Waterstone. HMV, unlike Woolworth, has a large number of well-situated high street and shopping centre sites.
But it will be a close run thing.