HMV sees profits rise from strong video game sales

HMV has reported a rise in full-year profits, the company has benefited from a strong demand for video games.

The entertainment retailer, which operates 379 HMV stores globally and 313 Waterstone’s outlets, said pre-tax profits grew by 25.5% to £56.6 million in the 12 months to the end of April. However, this excludes income from the sale of its Japanese business last July.

Like-for-like sales rose 7.3% across the group, increasing 11.4% at HMV UK & Ireland. In addition Waterstone’s, its bookselling business, reported a rise in sales by 3.3%.

The firm has experienced a rise in demand for video games, this made up 21% of UK and Ireland sales, compared with 14% the previous year.

At the top of its bestsellers chart was the Nintendo DS game, More Brain Training, Fifa 08 for the Playstation 2 and the Nintendo Wii’s Mario & Sonic at the Olympic Games.

In addition, it has started to sell second-hand video games, which customers are trading in part-exchange for newer products.

The company said its 3-year programme to turnaround the business was paying off. It has been hit by strong competition from supermarkets and music downloads.

Simon Fox, the group’s chief executive, said that the group is ahead of schedule even though it is just 12 months into its turnaround programme.

Mr Fox added that the group is aware of the economic outlook but the current financial year has commenced in line with our expectations. The group is confident that it can prosper in a rapidly-changing market.

The company plans to roll-out additional ’next generation‘ stores, which feature a ‘social hub‘, entertainment websites and games area.

Commenting on the figures, Richard Hunter of Hargreaves Lansdown Stockbrokers, said the figures are decent enough but the company remains embattled in its field.

Digital downloads remain in demand and the presence of online retailers and the supermarkets is exerting severe pressure on their business model, concluded Mr Hunter.

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