Struggling HMV enjoys suppliers' seasonal goodwill

14 December 2012

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14 December 2012 | Adam Leach

Record labels and film studios are giving HMV supplies on consignment to ease the financial pressures facing the retailer.

In its results for the first half of 2012, published yesterday, the company reported a loss of £36.1 million, less than the £50.1 million loss made in the same period in 2011. The company continues to be in a challenging financial position and has required financial and operational support from suppliers to improve its standing.

The results explained a number of suppliers have been providing stock on a consignment basis. This means HMV is only required to pay for the stock that it sells. “The changes made to the nature of HMV UK’s relationships with its key music and visual suppliers have delivered an improvement in gross margin while at the same time maintaining a relevant pricing strategy for the customer. The business is purchasing increasing amounts of back catalogue on a consignment basis,” the results said.

Trevor Moore, chief executive at HMV, said: “I am encouraged by the support the business enjoys from the suppliers and believe there are opportunities to develop these relationships even further to the benefit of both HMV and the suppliers. This will be a key area of focus through 2013.”

The favourable terms for sourcing stock are part of a wider collaboration between HMV and its suppliers. They are keen to see HMV, which offers higher profit margins than online retailers, survive. Over the year, the company and suppliers have also worked closely to maximise sales.

The results explained due to the impact of events such as the London 2012 Olympics and the Queen’s diamond jubilee on consumer activity, many suppliers opted to “avoid any significant product launches”. Instead they worked with HMV on special offers and promotions. Last year, suppliers to HMV took a 2.5 per cent share of the company.

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