Struggling entertainment retailer HMV posted a further slump in sales in its first quarter as it grapples with waning demand in its traditional markets of CDs and DVDs.
The 90-year-old group, famous for its Nipper the dog trademark, said Friday sales at stores open over a year plunged 15.1 per cent in the 18 weeks to September 3.
That compares with a like-for-like sales fall of 14.5 per cent in the year to April 30 and was broadly in line with analysts’ expectations.
Total retail sales in the first quarter, including the impact of 29 store closures, fell 21.8 per cent. Including the firm’s HMV Live business, total sales declined 19.4 per cent.
“Overall, our plans for the Christmas trading period are on track,” said Chief Executive Simon Fox.
HMV has issued four profit warnings this year as a 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 of music and books.
In June the firm secured its immediate future with a £220-million refinancing deal with banks. It has also sold the Waterstone’s book chain and its Canadian arm to cut debt.
HMV has been shifting its emphasis from CDs and DVDs into the growth markets of new technology products, such as MP3 players, headphones and tablet computers, as well as live music and event ticketing.
The firm is spending 6 million pounds refitting 150 stores by early October to focus 25 per cent of selling space on fast-growing portable digital products and accessories.
It said like-for-like sales in its initial six “Fast Forward” stores have continued to grow by over 100 per cent.
The firm said HMV Live fared well during the summer festival season, with attendances up over 20 per cent on a like-for-like basis.
Shares in HMV, which have lost 90 per cent of their value over the last year, were unchanged at 6.5 pence at 0840 GMT, valuing the business at about £26-million.
HMV made an underlying pretax profit of £28.9-million in the year to April 30. However, analysts expect little or no profit in the 2011-12 year and despite the refinancing believe the firm faces an uncertain future.
Arden Partners analyst Nick Bubb reckons HMV will attempt a rights issue early next year.
Seymour Piece analyst Freddie George is forecasting a 2011-12 pretax profit of £2-million.
“We maintain our “sell” recommendation as we continue to believe that the business is a value trap and management will struggle to grow profitability,” he said.
Thursday Home Retail’s Argos business reported a 8.6-per-cent plunge in second quarter underlying sales, while on Wednesday Dixons Retail, the U.K.’s largest electricals retailer, posted a 10-per-cent fall in first quarter U.K. like-for-like sales.