HMV hopeful for its survival as sales fall

Kasmira Jefford
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EMBATTLED music retailer HMV said sales of consumer gadgets such as headphones and tablet computers had helped improve its sales over the crucial Christmas trading period as the group attempted to offset the long-term decline in CDs and DVDs.

Sales at stores open over a year fell 8.2 per cent in the five weeks to 31 December. But that is an improvement on like-for-like sales since HMV updated investors in the week before Christmas, when sales were running down more than 13 per cent.

Chief executive Simon Fox said “clearly overall numbers are disappointing” but added he was optimistic about the group’s prospects.

While reiterating last month’s warning that “material uncertainties” may cast doubt on the firm’s ability to continue as a going concern in the future, Fox said he was confident that the business would going to be around “for some Christmases to come.”

The 91-year old company, which runs 256 stores in UK and Ireland and employs 4,500, issued three profit warnings in 2011, forcing it to sell off its Waterstone’s business earlier this year.

Last month the group appointed Citigroup to find a buyer for its profitable HMV Live division to help cuts its £160m debt pile, but analysts believe the company will have to further to pay down debt and provide sufficient working capital.

The live division, which runs 13 venues including the Hammersmith Apollo, is understood to have sparked interested among several potential bidders including Time Out owner Oakley Capital.

The group has been focusing on offsetting falling demand for CDs, DVDs and video games, by refitting its stores with a technology range of portable digital products. These delivered technology like-for-like sales of 51 per cent in the five-week period. Fox said the firm sold 500,000 pairs of headphones in December and 20,000 tablet computers.

Shares fell 1.67 per cent to 2.95p yesterday.