HMV Ireland slips into the red after sales fall

Sales of bestselling CDs by Lady Gaga, Adele, Katy Perry and Take That were not enough to prevent the Irish arm of HMV going into the red last year.

Accounts just filed by HMV Ireland Ltd to the Companies Office show that the company recorded a pre-tax loss of €2.5 million in the 53 weeks to the end of April 30, 2011.

This follows the firm recording a pre-tax profit of €631,000 the previous 52 weeks to April 24, 2010.

The firm went into the red after sales at the Irish arm last year decreased by 11% from €85.8m to €76.4m.

The loss includes exceptional costs of €1m relating to the impairment of certain retail assets and redundancy costs.

At the end of April, the Irish arm of the music, video, electronic games and book retailer operated 16 stores here.

According to the directors’ report, “the company continues to trade and will continue its existing business for the foreseeable future”.

The accounts show that the company paid €38m in dividends in fiscal 2010 and the loss sustained last year further reduced the company’s accumulated profits to €7.2m. No dividend was paid last year.

The figures show that the exceptional costs relate to a €951,000 impairment of certain retail assets and redundancy costs of €50,000 relating to non-store employees.

Shares in HMV Ireland’s parent, British-based HMV, fell last month after sales decreased across its 256 store network in Britain and Ireland by 8% in the five weeks to Dec 31.

HMV is facing intensive competition from online retailers, and the directors for its Irish unit say one of the principal uncertainties is “the growth of new methods of digital delivery”.

The figures show the company’s operating loss before the exceptional costs of €1m was €1.53m last year. This followed the firm recording an operating profit of €426,000 before exceptional costs in fiscal 2010.

The figures show that the numbers employed by the company fell by 79 during the year from 372 to 293, with the company’s staff costs, including directors’ emoluments, decreasing from €9.4m to €9.1m. The figures show that 292 are engaged in sales, with one engaged in administration.

The accounts show that the company’s cost of sales decreased by 4% during the year from €81.7m to €75.4m, with its administrative expenses decreasing from €1.7m to €937,000.

The accounts include a non-cash depreciation charge of €725,000.

Directors emoluments for the year declined from €272,000 to €159,000.