LONDON (Reuters) – Struggling British entertainment retailer HMV forecast a worse than expected loss for the 2011/12 year, blaming a weak new release schedule in CDs and DVDs in its final quarter.
But the 91-year-old retailer also said on Friday it was confident of returning to profit in the 2012/13 year, reflecting disruption to rival computer games retailer Game and better terms with key music and film suppliers.
HMV, famous for its Nipper the dog trademark, forecast a pretax loss of 16 million pounds ($26 million) for the year to April 28, ending the period with net debt of about 168 million pounds.
It had previously forecast a loss of about 10 million pounds and net debt of up to 180 million pounds.
The firm said sales at stores open over a year fell 12.9 percent in the final 17 weeks of the year, particularly reflecting a very weak January.
For 2012/13 HMV forecast a pretax profit of at least 10 million pounds, well ahead of analysts’ consensus forecast for a loss of around 5 million pounds.
HMV added that the strategic review of its Live music venue business was ongoing.
The firm, which trades from about 250 stores in Britain and Ireland, employing about 4,500, has been shifting its emphasis from fast-declining CD and DVD markets into the growth markets of new technology products, live music and event ticketing. It has closed stores, and sold its Waterstone’s book chain and Canadian arm.
It is facing intense competition from internet retailers and the rise of digital downloading as well as the march of grocers such as Tesco into general merchandise ranges.
Shares in HMV, which have lost 64 percent of their value over the last year, closed Thursday at 3.7 pence, valuing the business at about 16 million pounds.
(Reporting by James Davey- editing by Kate Holton)