HMV Group has predicted that it will return to profit next year, having posted half year pre-tax losses of £16.2m, as it predicts that entertainment devices will become its core offer.
The entertainment company saw a decrease from last year’s profit of £17.6m over the same period, while its operation sales fell from £1,102.2m to £873.1m.
Like-for-like sales decreased by 12.1 per cent, while the HMV Live and aNobii joint venture was also discontinued, resulting in a charge of £38.7m.
Total group loss, after tax, including impairment charges, was £80.4m, less than the sum of £122.6m last year, although the company has also decreased its underlying debt by £4m over the last year, now sitting at £166.7m.
Looking forward however, the company has said that it expects to post a pro forma pre-tax profit of £10m for 2012/2013, while its strategic review of its remaining Live business continues, as it discusses potential disposal options.
HMV has also predicted that entertainment devices will become ‘the most significant’ part of its business, as it differentiates its offer through the quality of its in-store experience and digital entertainment content, which will be bundled with devices.
The sale of music, film and games will continue to be at the core of its offer in both physical and digital form, it has also stated.
Entertainment devices will grow to become the most significant part of our business. Our offer will be differentiated through the quality of our in-store experience and the digital entertainment content that will be bundled with devices. Music, film and games will remain at the heart of our offer delivered in both physical and digital form and through increasingly deep partnerships with our suppliers
Outgoing CEO Simon Fox, commented: "The last year has been a difficult and challenging one for HMV and, as expected, this is reflected in our annual results. However, we are confident that the actions we have taken will enable us to significantly improve cash generation and make profits of at least £10 million in the year ahead.
“Although we have clearly been through a turbulent period, our financial position is now stable thanks to the support of our suppliers, banks and colleagues, and I am confident, as I hand over the reins to Trevor Moore, that HMV has a secure future under his leadership."
Fox will be succeeded by Trevor Moore on 3 September.