Troubled music retailer HMV slumped to a loss of £16.2 million today but said its recovery was on track as it ramps up sales of electronic devices.
The group, which operates 252 stores, expects profits of at least £10 million this year as it drives more business from selling the latest iPad, Google's Nexus tablet and wireless headphones alongside its CDs and DVDs.
It fell into a loss for the 52 weeks to April 28 after a "turbulent" year that saw like-for-like sales slide 12% amid fierce online competition.
The company's rescue plan has seen it sign a new deal with suppliers, including Universal Music, while it sold its Waterstones book chain and Hammersmith Apollo venue to get to grips with its debt mountain.
Electronic devices now represent 11% of its business after it rolled out an extended range to 144 stores and it said it will revamp a further 25 stores in coming months.
Chief executive Simon Fox, who will be replaced next month by former boss of camera retailer Jessops Trevor Moore, said: "The last year has been a difficult and challenging one for HMV and, as expected, this is reflected in our annual results.
"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."
HMV's confirmation that it is on-track to return to profit came as a relief to the City, amid fears that its performance may have worsened in recent weeks following the announcement that Mr Fox and his finance director David Wolffe would step down.
Shares rose 10% but the company is still worth just £16.4 million, having seen its stock tumble from 140p before the financial crisis to less than 4p today.
Its retail arm saw total sales fall 20.8% and made operating profits of just £1.3 million, which was £23 million lower than the previous year, after it closed 22 more stores than it opened over the year.
HMV said the market for games, music and films on DVDs or CDs have all shrunk by between 10% and 20% over the year as more people download content from the internet. However, it was encouraged by market share gains in the final quarter.
It hopes sales of computer games will benefit following the demise of rival Game earlier this year, although some analysts have doubted this, pointing out that it failed to gain a noticeable uplift from the collapse of Zavvi in 2008.
Following the sale of the Hammersmith Apollo for £32 million, HMV is still looking to offload the remainder of its HMV Live business, which runs numerous venues and a number of festivals including Lovebox in London and Global Gathering near Stratford-upon-Avon. It today booked a £37.1 million charge for the business.
But Seymour Pierce analyst Kate Calvert remained unimpressed by the turnaround plans, saying the business has "potentially insurmountable structural issues".
- More about:
- Financial Crisis
- Hammersmith Apollo
- Record Companies