HMV upbeat despite Christmas sales slump
Monday 09 January 2012
Entertainment group HMV insisted today that it still has a future - despite reporting a further drop in sales in the run-up to Christmas.
HMV, which owns 252 stores in the UK, said its plans to shift focus to technology products, by refitting stores with an extended gadget range, saw group like-for-like sales fall 8.1% in the five weeks to December 31.
But in the 144 stores refitted with an increased range of portable digital products, like-for-like technology sales were up 51%.
HMV, which recently sold bookseller Waterstone's and announced plans to sell its live music division, repeated its warning that there were “material uncertainties” which may cast doubt on the group's ability to continue.
But chief executive Simon Fox added: “Undoubtedly trading conditions and the consumer environment remain challenging, but we remain confident in HMV's future prospects.”
Freddie George, a retail analyst at Seymour Pierce stockbrokers, said the update was marginally better than expected.
He added: “It is encouraging that the HMV Retail business has seen an improvement in trading although the like-for-like sales were still negative.
“We remain concerned, however, that net debt levels are high at £160 million following the disposal of Waterstone's and HMV Canada.”
Elsewhere, HMV reported a 9.7% decline in group like-for-like sales in the nine weeks to December 31.
The group said its previously announced strategic review of HMV Live, which runs 13 venues and a number of festivals including Lovebox in London and Global Gathering near Stratford-upon-Avon, was making good progress.
The chain has felt the pressure of the consumer spending squeeze as cash-strapped customers turn to cheaper deals on the internet for music and film.
HMV disclosed a bottom-line pre-tax loss of £45.7 million in the 26 weeks to October 29, compared with £27.4 million the previous year, while like-for-like retail sales fell 13.2% in the seven weeks to December 17.
The group previously announced the closure of up to 40 stores in a bid to make millions of pounds of cost savings, with 15 shut in the first half of the year.
Meanwhile, the sale of Waterstone's and HMV Canada raised the group £55 million and ensured a £220 million refinancing deal with its lending banks.
HMV was the first of many retailers to report this week on their performance over the Christmas break with Marks & Spencer, Argos owner Home Retail Group, chocolatier Thorntons and supermarkets Tesco and Sainsbury all publishing updates.
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