David Prosser: It's time for HMV's boss to prove he really has the X-factor
Wednesday 06 April 2011
Outlook A few weeks ago, Simon Fox, the chief executive of HMV, used a speech to a conference hosted by Retail Week magazine as an opportunity to rebut the arguments of those who believe his company is not long for this world. "In five years' time, we will still have hundreds of stores on the high street," he said.
One might say good for him – after all, if HMV's boss cannot manage to stay positive in the face of such unremittingly bad news for the retailer, what hope is there for the company? But there is an alternative response to Mr Fox's bold promise: like so much else HMV's boss has had to say in recent months, the impressiongiven is that he is reading a different script than everyone else.
In January, for example, Mr Fox warned that HMV's profits would be lower than previously expected. Unfortunately, he has since had to revise that, lowering the forecast on two subsequent occasions, including yesterday. HMV's chief executive has also insisted that its Waterstone's subsidiary is not for sale – the company has since conceded that options for its disposal are now being considered.
In short, Mr Fox appears to have lost his grip on a crisis at HMV that has been spiralling out of control for several months. And the options for fighting back are dwindling by the day. For example, the opportunity to roll together HMV and Waterstone's in single-store formats, an idea which has had some success in a handful of outlets, will disappear if the latter has to be sold. A successful rights issue now looks very difficult to mount, given the lack of confidence shown by investors.
Mr Fox's vision is one of an HMV selling a different range of products to today's offering – more technology, presumably, and less of the music and film that onlinecompetitors can offer more cheaply and efficiently. However, anyone who has visited an HMV store of late – getting to the till involves fighting your way through piles of discounted tat – will know that this vision remains miles from being realised.
Can HMV's boss get shareholders to the promised land? The company's remuneration committee certainly appears to think so – it granted him a whacking pay rise last year. Since then, he has done little to justify the confidence shown in him.
Let's not be unfair. HMV is trading in a market where consumers' disposable incomes are now falling for the first time in 30 years. It also faces challenges beyond its control from the unstoppable rise of internet retailers.
All the same, if Mr Fox wants to persuade his critics – and, even more importantly, his lenders – that HMV really will still have such a significant high street presence in 2016, he's going to have to start giving some more convincing explanations for why he feels so confident.
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