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HMV has halted its UK expansion in anticipation of the rising wage costs due to commence next month, and will open stores in Ireland and Belgium instead, The Guardian has reported.
According to managing director Phil Halliday, HMV had ambitions to open as many as 10 additional stores in the UK this year. However, this plan had to be reined in as the retailer was “peddling pretty hard” to maintain profits despite strong sales growth.
In the year to 30 May 2024, HMV’s sales rose 6.5% to £189.6m due to the reopening of its Oxford Street flagship store.
The group also attributed its performance to growing online sales thanks to the growing popularity of traditional formats such as vinyl and CDs. Exclusive releases from popular artists, such as Billie Eilish and Charli xcx, were driving a 15% rise in vinyl sales and a 5% rise in CDs.
That said, it is understood from accounts filed at Companies House this week that pre-tax profits fell more than 6% to £4.9m due to rising costs – with higher costs playing a major part.
Halliday told The Guardian: “Growth is great but we are just about covering cost increases. It is quite frustrating at times.
“We understand that there are challenges that need to be addressed but the burden of tax put on retailers feels unfair. Other sectors contribute less as a percentage of revenue.”
HMV will be opening its online store to shoppers in Ireland and mainland Europe later this month. If conditions improve in the UK, the retailer also told The Guardian it still hopes to expand as intended.
Beginning in April, employers will face higher costs for employing workers due to an increase in the national insurance contribution rate from 13.8% to 15%. This change was announced in October’s budget by Chancellor Rachel Reeves.
Halliday suggested that to offset the increased costs from the rise in employers’ national insurance and the minimum wage, the government should implement changes to business rates this year instead of 2026. These changes would specifically benefit stores with a rateable value of less than £500k.
