The financial woes of HMV continued this week, with its second profit warning prompting it to unveil a digital rescue plan.
The music retailer saw a tenth of the value of its share price after announcing profits were likely to be £10 million below expectations, after having already issued an earlier warning about falling profits as a result from online and supermarket competitors.
Its share price had failed to rally by the close of play Wednesday, ending 16% down after the day’s trading or 128.5 pence a share and suggesting the planned recovery package may be too little too late.
Neil Bright, HMV Group financial director told the City a planned restructuring programme, involving the sell-off of its underperforming Waterstones bookshops and HMV stores and save the company £40m over the next three years.
The company also outlines plans to sell more digital music players and downloads, with a new marketing campaign and interactive kiosk ‘hubs’ it will pilot in its stores this autumn. HMV.co.uk is expected to earn increase its sales three-fold, to 20%, by 2010 the company said.
By contrast, Virgin Retail has had a transactional website since September 2002 that saw a surge in sales during Christmas 2006, by 191% on the previous year.
Virgin Retail is planning redevelop its megastore entertainment brand online with a new site, to increase the product breadth of its CD, DVD and Games catalogue and deliver rich media content to customers.
The re-development of the website will also bring all website management and development in-house at Virgin Retail for the first time, with greater control and flexibility to build new features and functionality onto the platform. There will be an improved customer order solution for all stores as part of the new site.
Virgin Retail has been working with retail and e-commerce consultancy, Javelin Group, to advise on technology and web agency selection, and to implement the new e-commerce platform. The company has also selected companies hybris, Mercado and Underwired to create the new website, which will be live by late summer 2007.