HMV losses widen

City A.M. Reporter
Entertainment retailer HMV, grappling with waning demand in its core CD and DVD markets, posted wider first-half losses and warned it faces a battle to stay in business.

The 90-year-old group, famous for its Nipper the dog trademark, said it had adequate resources to continue trading for the foreseeable future.

"However, 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," it said.

HMV, which employs 4,500, said it was maintaining "regular and constructive discussions" with its banks and has started a strategic review of its HMV Live division which may lead to its sale.

The group, which has issued four profit warnings this year, made an underlying pretax loss of £36.4m in the 26 weeks to 29 October, compared with a loss of £27.4m in the same period last year.

The firm has suffered as the downturn in consumer spending exacerbated the long-term challenges of intense competition from supermarkets and internet retailers, as well as the increasing popularity of digital downloading.

Total sales slumped 17.6 per cent to £364.9m, with sales at stores open over a year down 11.6 per cent.

HMV said like-for-like sales were down 13.2 per cent in the seven weeks to 17 December.

The firm has been shifting its emphasis from CDs and DVDs to the growth markets of entertainment-related technology products such as MP3 players, headphones, speaker docks and tablet computers, as well as live music and event ticketing.

HMV ended the first-half with net debt of £163.7m.

In June, the group secured its future, at least in the short term, with a £220m refinancing deal with banks. It has also sold the Waterstone's book chain and a Canadian arm to cut debt.