Bad weather drives HMV Christmas sales slump

[January 05, 2011]  LONDON (AP) -- Music and games retailer HMV Group PLC said Wednesday it plans to close about 60 of its U.K. stores this year following a dismal performance in its key Christmas shopping season.

HMV said it will struggle to meet its April commitments on its banking covenant, and will take further steps beyond 10 million pounds ($15.6 million) of cost savings it has already identified.

Sales in the five weeks to Jan. 1 fell 13.6 percent on a comparable stores basis in the U.K. and Ireland, and 8.9 percent in Canada, Hong Kong and Singapore, HMV said.

HMV shares fell 17 percent to 27 pence in early trading on the London Stock Exchange. A year ago, shares traded at about 96 pence.

For the 10 weeks to Jan. 1, HMV's sales in the U.K. and Ireland were down 14 percent on a like-for-like basis.

For the full year, HMV said pretax profit excluding exceptional items should be around 46 million pounds ($72 million), at the low end of market forecasts.

"Whilst HMV has had a challenging year to date, it remains a profitable and cash-generative business and a powerful entertainment brand. The pace of change in the markets in which we operate underlines the urgency with which we must continue to transform this business," said HMV Chief Executive Simon Fox.

HMV did not identify which of its 285 stores in the U.K. and Ireland it plans to close.

The brightest spot in the company's report came from its Waterstone's bookstores which managed a drop of just 0.4 percent in sales for the five weeks and 2.1 percent for the 10 weeks.

[Associated Press]

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