Music retailer Musica saw its sales decline 5.2% in the 18 weeks to January as it closed 10 stores and was affected by deflation.
Parent company Clicks Group yesterday posted its trading update for the 18-week period. CEO David Kneale says the period was characterised by selling price deflation.
“This dampened sales growth across all businesses in the group. In addition, consumers remain cautious about how they spend their money, and this was most evident in those categories where there was little product innovation.”
Musica's turnover dropped to R392.3 million, from R413.7 million, in the first 18 weeks to January 2011. The unit saw price deflation of 6.3%.
In 2012, Musica will focus on allocating more space to its growth categories of technology, accessories and cellular, it says in its latest annual report for the year to August. “Entertainment retailing will remain challenging as downloading continues to impact the physical formats.”
Musica's performance “slowed dramatically” in the second half of the year, as the decline in the CD and DVD market accelerated. CD sales dropped 13.8% in 2011, while DVD sales declined 9.4%, it says.
However, the annual report notes, sales of technology and lifestyle merchandise, which includes digital accessories, headphones and portable speakers, cellphones and airtime, increased 60.7%.
The annual report notes, despite price deflation, gaming sales improved 11.4%, driven mostly by the launch of new hardware, including PlayStation Move, Xbox Kinect and the Nintendo 3DS.
The Clicks Group's total turnover improved 4.9%, to R5.35 billion, in the 18 weeks to January. Clicks is home to The Body Shop, Clicks pharmacies and the retail outlets of the same name.
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