HMV warns on future as sales slump again
HMV could sell its Live music division to reduce debt after warning that it faces a battle to stay in business in wake of another slump in sales.
The entertainment group’s pre-tax loss widened to £36.4m in the 26 weeks to 29 October, from £27.4m a year earlier. Total sales dropped 17.6% to £364.9m, while sales from stores open for more than a year slumped 11.6%.
Chief executive Simon Fox says that group, which has debts of £136m, has sufficient resources to continue trading in the foreseeable future but the “economic environment and trading circumstances create material uncertainties which may cast significant doubt on the Group’s ability to continue as a going concern in the future.”
The company, which stresses that it remains in “regular and constructive discussions” with its banks, thought it had secured its future in June with a £220m refinancing deal and sale of the Waterstone’s book chain.
The retailer makes much of its sales in the final month of the year from Christmas shoppers buying presents for relatives but worryingly for the company, same store sales for the 7 weeks to 17 December were down 13.2% in its retail division. It insists, however, an extra December Saturday this year will “make a materially positive impact” on year-end trading.
The entertainment group says it has launched a strategic review of HMV Live “which may lead to its sale”. The group says the division made a profit of £3.4m in the period, up from £1.4m a year earlier, while attendances at its 13 music venues and music festivals including Lovebox rose 30% in the first-half.
HMV has been trying to refocus its business in the face of declining physical music and film sales from its high street stores and increasing competition from downloading and internet retailers.
It has changed the layout of its retail outlets to emphasise technology products and recently launched a video-on-demand service in partnership with FilmFlex.
The company adds that like for like technology sales increased 42% since the store refits, while income from headphones, speakerdocks, and tablets rose 147%.
