Undervaluved HMV Group's share price.....

jinkster

I thought that too about Blacks Outdoor store a few months ago - share price fell then went back up again!

My local Blacks store were constantly having sales and the store empty!

Martinslovechild

I'm extremely passionate about music. Twenty years ago, the thought of entering an HMV store would have filled me with excitement. Unfortunately it doesn't any more.

Why? For starters, HMV is no longer a music store - by expanding its range of products, it's sadly become another Woolworths. It's no longer specialist - the vinyl racks are now either non-existent or so small that you have to ask a member of staff where they are (Amazon boasts 300,000 available vinyl titles). Even CD numbers have been reducing over recent years. Fine if you want a three for a tenner in their everlasting sale - but really - who doesn't already have a copy of The Stone Roses' debut or Coldplay's X & Y by now?

HMV sells T-shirts, DVDs, Blu-Rays, CDs, X-Box games, PS3 games, MP3 players, portable DVD players etc etc. Therein lies the problem - I simply want HMV to sell music - it's His Master's Voice after all - not His Master's DVD.

We've heard of large numbers of independent record shops closing down in recent years (and some bigger players too such as Virgin / Zavvi / Music Zone / Fopp). Look at some of the ones doing well though - they have good online presences (check out Norman Records / Action Records / BoomKat / Banquet / Piccadilly Records etc) with sound snippets, great recommendations, live bands playing in-store, weekly emails in a few cases listing new items.

I've been buying items from HMV's website for several years. I receive emails about their HMV Pure Points scheme with double-points offers - but really - 50,000 points for a poster of some kid I've never heard of??

I really don't want to see HMV go to the wall - but they should:-

• Sell Waterstone's (they'll probably be forced into it just to ensure that they don't break their banking covenants),
• Ditch a lot of the tat which they sell in-store,
• Hire a team of music-lovers in to write really good weekly emails about new music,
• Radically update their Pure Points scheme,
• Update their website with decent recommendations (Amazon really have this area sussed)
  and
• Make downloads available in-store for people who really must buy sub-quality recordings (320kbps as opposed to CD's 1411kbps).

I'd love HMV to be around for a good while. They used to sell all the latest chart stuff, a great selection of back catalogue items and loads of limited-edition items too. They still do the first, are not so good at the second and hardly have any of the third (Norman Records as a comparison stocks loads of limited editions of 50, 100, 200 etc and has a huge amount of people signed up to its excellent weekly emails, a fab twitter feed and a facebook presence too).

So - back to the original question - I personally wouldn't invest in HMV shares. I'm not certain that the current management team have the guts or know-how to turn the business around and time may already be against them. Downloads now account for 98% of the singles market and 30% of the albums market. In the U.S. album downloads overtook physical album sales for the first time in 2010 - it's heading that way in the U.K. too. This means only one thing for HMV - they need to become specialist rather than trying to be everything to everybody.

Will they be here by Christmas 2011? I wouldn't stake my HMV Pure Points on it...

Reaper

I bought HMV because even though I expected a slow decline in their share price I expected to more than make up for it with many years of good dividends. However the fall has been much more rapid than I expected.

My currently feeling is that I won't sell up. Don't forget they are still making a profit. While I think in the long term they are doomed and I wish I had not bought when I did I'm sticking with my original plan and holding them for income. I also hope their diversification plans succeed though they have been making only slow progress so far.

It's not my worst performing share. That award would go to JJB which I bought on a whim (unusual for me and never to be repeated!) thinking it was past the worst. Unlike HMV with them there is no prospect of any dividends to ease the pain.

Nanpy

Reaper - I suspect the only way you'll make your money back off HMV is day-trading.

The earlier comparisons to YELL were very appropriate. YELL has been sitting at a level for months now, with people waiting for the next RNS that will get their money back. The reality is both companies don't have much to offer in the long term, as both their businesses are migrating online.

Reaper

I have no expectation of the the share price ever going back up, I'm hoping the generous dividend compared to the share price means I make money purely from the income. The big question is whether they hold up long enough to recoup my investment.

With no other high street competition left I had hoped they would only suffer a slow decline over many years, but sadly their recent performance has been disappointing.

In the end though it forms part of my small "risky shares" portfolio which is spare money I can afford to lose. If they pay off I open the champagne, if they fail I drown my sorrows down the pub. So far of the 5 shares in there 2 are up nicely, 2 are down badly, and 1 hasn't decided what it's doing.

Nanpy

I don't really follow this share but I did notice that they've halved their interim dividend and I expect they'll be doing something similar with the full dividend. I guess, depending on your holding, you can either hold-on and hope for the best or cut your losses. Hard to see how they could ever have kept paying the same dividend on declining profits. Do your own research etc.

Jonbvn

Martinslovechild wrote: »

HMV sells T-shirts, DVDs, Blu-Rays, CDs, X-Box games, PS3 games, MP3 players, portable DVD players etc etc. Therein lies the problem - I simply want HMV to sell music - it's His Master's Voice after all - not His Master's DVD.

I empathise with your view. Unfortunately, from a business perspective what you suggest is not sustainable. Delivery of media to the masses will inevitably become a solely online business (IMHO).

marvin

jinkster wrote: »

I thought that too about Blacks Outdoor store a few months ago - share price fell then went back up again!

My local Blacks store were constantly having sales and the store empty!

Blacks were having problems in that they wanted to go into a company IVA and Sports Direct who own a large 5 of their shares were blocking it but not coming up with an offer to buy. That is what suppressed the Blacks shares and when Ashley dropped out the scene and the IVA was arranged the shares went up again.

The reason HMV is low at the mo is because there is a very real possibility that they will breach their loan covenants and the bank will seize control of the business from Guy Hands.

HMV is in fact now very similar to Woolworths in the fact if it survives or not is very much in the hands of the banks.

One for the very brave only

blinko

similar with JJB another one in trouble although look at michael pouche they were very close to breaching there loans and they are now a take over target

but who would take over HMV or JJB...??

Nanpy

HMV still looking undervalued?

http://www.bbc.co.uk/news/business-12605912