Expansion costs drive HMV Ireland into red

Expansion costs drove the Irish business of entertainment retail firm HMV into the red last year, as it recorded a pre-tax loss of €144,000.

The company opened two new stores, in Dublin and Galway, during the 12 months to the end of January 2015, the period for which its latest accounts cover.

This move contributed to revenues more than doubling to €19.66m.

However, a €600,000 investment in the same period ate into profitability, with operating profits falling by 75% to €254,000.

The company’s previous set of accounts had shown a pre-tax profit of €114,000 but that only covered an 18-week period up to the end of December 2013.

In the latest accounts, the directors of HMV Retail Ireland Ltd state that the revenue and operating profit achieved was “in line” with targets for the period.

During that time, numbers employed by the company grew from 132 to 162, with staff costs amounting to €2.87m.

Enhanced terms and supply agreements that were negotiated with key suppliers, along with increased marketing spend, helped HMV meet its targets.

The music retail business has been under pressure from a variety of sources in recent times. The directors cited one of the risks facing the business as “piracy and illegal downloading, both physical and online”.

They said piracy and downloading is now estimated to have surpassed the legitimate market in volume of transactions and has continued to grow due to a lack of enforcement of the existing copyright legislation.

The continued growth of online sales and digital downloads have also hampered HMV’s recovery.