Stock build dampens Home Entertainment
Article Date: Feb 05 2002Video and DVD retail business Home Entertainment Corporation has enjoyed a solid if unspectacular six months, with pre-tax profits a mere £20,000 ahead at £3.48 million, writes William Davidson.
In the six months to December 2001, the Aim-listed company's revenues rose from £44.4 million to £56.2 million, while profits crept ahead from £3.46 million to £3.48 million. The erosion in pre-tax margins was blamed on the build-up of stock in its 'sell-thru' activities. This is where the company offers videos and DVDs for sale rather than rental. Also the summer weather in 2001 was better than that in 2000.
The continued success of the business depends, in part, on poor summer weather and a return to the UK of British troops. Rainy summer days mean that people are more inclined to watch videos rather than enjoy the great outdoors, while a contract with the Naafi depends on British servicemen having the time and the inclination to settle down with a video.
The conversion of video-watchers to DVD should bode well for the group, as should the introduction of new gaming consoles such as Microsoft's X-Box.
Since flotation, Home Entertainment (HET) shares have performed well, climbing from the 170p placing price to the current 235.5p, down 7p on the day.
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