Golden Discs highlights rents following €697,972 loss
Published 27/05/2011 | 05:00
GOLDEN Discs, the music chain, said it lost €697,972 in the year to June and warned that future profitability depends on lower rents, further branch closures and better sales.
The recession and music piracy have continued to take their toll, said the Irish-owned chain, which temporarily went into examinership in 2009, in results recently registered with the Companies Office in Carlow.
"Since the financial year end, the company has continued to experience deteriorating market conditions and is operating in a very difficult retail environment," the 32-year-old company said.
Despite the problems, the music store operator more than halved losses from the previous year as it closed stores and cut staff numbers to 55 from 87. Total net assets halved to €632,097 over the same period, while wage costs were also almost halved to €1.3m. Among the cost-cutting measures will be moves to new locations and a review of head-office overheads.
Auditors John Marks & Co warned in the latest results that a material uncertainty exists which "may cast significant doubt about the company's ability to continue as a going concern".
The chain went into examinership with debts approaching €12m in 2009 after a court petition from its largest creditor, Sony Music Entertainment. A rescue deal was eventually agreed, with the company's one-time managing director, Tony Killoran, returning as an investor.
Golden Disc's problems mirror similar problems among other retailers in related industries. Zavvi (formerly Virgin Megastores) and Tower Records in the US (but not Dublin) have all fallen victim to the digital download revolution, which allows music lovers to download music for free and illegally.
Irish consumers are likely to download even more music as broadband improves and the process becomes easier.
Book shops are also struggling from the same problems. Waterstones closed stores in Ireland earlier this year, while Irish-owned Hughes & Hughes went into receivership last year, citing the rise of electronic books and falling passenger numbers at the country's airports, where the chain had several book shops.
Internet bookseller Amazon said last week that it now sells more digital e-books than traditional books and the company is selling more and more e-readers.
Amazon said that for every 100 print books it has sold since April 1, it has sold 105 e-books. That includes both paperback and hardcover books.