HMV has saved £6 million in the first of a three year programme to combine IT and back office functions, and centralise procurement of non-sale goods.
The music, DVDs and books retail group said it had met the targeted savings for the year to 26 April.
The programme aims to deliver cost savings of £40 million each year by 2010, as part of a transformation plan to “revitalise” the business after it suffered a first half loss last year. Profits for the year to 26 April rose 25 percent to £57 million, on the back of a 7 percent like-for-like sales rise.
HMV last year rolled its finance and IT functions into a shared service centre, which has centralised the procurement of goods not for sale.
In a statement, the firm said it had made “good progress” on reducing its cost base across the HMV chain and Waterstone’s, the book retailer it owns.
“Combining the back office finance and IT functions of HMV UK & Ireland and Waterstone’s, and centralising both businesses’ procurement of goods not for resale successfully delivered the anticipated savings of £6m for the year,” it said.
Waterstone’s was continuing to work with supply chain partner Unipart, it said, to create a new ‘book hub’ serving stores and its website. Stores were being added one by one, it said.
Simplification of HMV’s supply chain would be complete by April 2009, it said. Online sales increased by 42 percent after HMV made investments to improve the functionality of its website.