HMV's Irish arm sees profits drop 88pc despite good year for stars
Sales of best-selling CDs by Lady Gaga and the Black Eyed Peas were not enough to prevent pre-tax profits plunging by 87.5pc at the Irish arm of HMV last year.
Accounts just filed by HMV Ireland Ltd to the Companies Office show that the company's pre-tax profits dropped by €4.4m from €5m to €631,000 in the year to the end of April 24 last.
The drop in pre-tax profits comes in spite of HMV Ireland increasing its revenues by 23pc, or €16m, last year from €69.7m to €85.8m.
The opening of two new stores, increasing the number to 16, during the year contributed to the company increasing its sales where it is involved in the retail of music, video, electronic games, books and related products.
The accounts show that the company paid €38m in dividends to its UK parent company last year reducing its accumulated profits from €47m to €9.5m.
In January, its parent, the HMV Group, said it was planning to close 40 HMV outlets across Britain and Ireland this year. So far nine of the 40 HMV stores targeted for closure have shut.
The HMV Group recently announced that group-wide profits for the current financial year would be near the bottom of the range of forecasts. This followed a 13.6pc slump in sales in Britain and Ireland in the five weeks to January 1.
According to the directors' report for HMV Ireland Ltd, "the company continues to trade successfully and will continue its existing business for the foreseeable future".
The firm's revenues were boosted during the fiscal 2010 year by sales from Lady Gaga, the Black Eyed Peas, the Kings of Leon and Michael Jackson.
HMV's network of stores in Ireland has grown in recent years after it acquired five stores from the administrator of Zavvi Ireland Ltd, which operated under the Virgin Megastore brand.
The figures show that HMV Ireland's operating profits dived by 96.6pc from €2.84m to €96,000 during the year. The company's operating profits were adversely affected by a €330,000 impairment on its property and plant.
The figures showed that the numbers employed by the company increased by 106 during the year from 266 to 372 with the company's staff costs, including directors' emoluments, increasing by 29pc from €7.3m to €9.4m.
The drop in cash deposits from €11.2m to €1.1m during the year resulted in the company's finance revenue decreasing from €2.2m to €636,000. This contributed to the 87pc drop in pre-tax profits.
The accounts showed that the company's cost of sales increased by 28pc from €63.8m to €82.1m and its administrative expenses increased from €1.5m to €1.7m.
The accounts include a depreciation charge of €838,000. Directors' emoluments for the year declined from €253,000 to €159,000.