Recession still taking sheen off Golden Discs

Record sales off key; end the shop wars; Bank of Ireland assets in new home; Irishman in Pole position

SALES AT music and film retailer Golden Discs remain off key in the recession.

Its latest accounts have just been filed with the Companies Registration Office and they show that the company made a loss of €710,521 on turnover of €11.2 million for the year to the end of June 2010.

This loss is roughly half the level recorded in the previous 12 months when Golden Discs was in examinership and significantly restructured its operation.

Golden Discs director Stephen Fitzgerald told me that few retailers are “immune from this current economic turbulence”, particularly as some shop rents remain unrealistic.

“We remain cautious about the future but are also considering potential opportunities,” he said.

In spite of Fitzgerald’s caution, Golden Discs recently opened two new stores in Dublin – at Northside Shopping Centre in Coolock and Charlestown Shopping Centre in Finglas.

This is an interesting move given the current climate in entertainment retailing.

Figures produced by ChartTrack show that the value of CD and DVD sales in Ireland fell by more than 20 per cent in 2010 – presumably largely because consumers have migrated online to buy their music and download films.

Fitzgerald, who owns 33.33 per cent of the business, said that “special interest” and “value” product lines are showing signs of growth and continue to form the foundations of its promotional activity.

The advent of iTunes and other online retailers has taken the rug from traditional high street retailers.

In parallel with that, supermarkets have been offering cut-price CDs and DVDs for some time.

In recent years, Virgin has disappeared in Ireland and Britain, with HMV picking up its prime stores here.

For its part, Golden Discs has rationalised its branch network. Its accounts show that its wage bill roughly halved to €1.4 million last year with employee numbers reducing from 87 to 55.

Directors’ fees fell to €76,500 from €121,760 in the period.

The examinership process – run by Michael McAteer of Grant Thornton – cost €2.78 million. That’s a lot of DVDs.

Creditors of Golden Discs will no doubt be hoping that the company can turn the corner and return to the black in the near future.

Under the terms of the scheme of arrangement put together by McAteer the company could be liable for an extra dividend payment to creditors of up to €250,000 if Golden Discs meets certain performance targets.

This applies to the financial years from June 30th, 2010, to June 30th, 2014.

Fitzgerald and his fellow investors – Gary Fitzgerald and Capeview Ltd – would no doubt be happy to make these payments as it would mean the business was once again hitting the right notes.