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HMV Retreats After Reporting Revenue Decline Led by Slump in Games Sales
HMV Group Plc dropped the most since December 2008 in London trading as the music and DVD retailer reported a sales decline led by a slump in electronic games.
HMV fell 11 percent. In Ireland and the U.K., sales at stores open at least a year declined 14.9 percent in the 19 weeks ended Sept. 4, the Maidenhead, England-based company said in a statement today. Total sales fell 5.9 percent.
Games sales dropped about 15 percent, in part because of suppliers delaying releases to avoid competing with the soccer World Cup, Chief Executive Officer Simon Fox said. As CD, DVD and games sales are hurt by the Internet, HMV is adding more digital products, expanding its Live music offering and trying to turn around its Waterstone’s bookstore chain.
“Suppliers deliberately do not issue new releases when people are watching the television,” Fox said in a conference call. “We do expect the games market to get much closer to flat closer to Christmas.”
CD sales declined 8 percent, and DVD “a little bit more,” Fox said. He predicted a “big pickup” in sales growth as products such as a Kings of Leon CD, the “Iron Man 2” DVD and “Call of Duty: Black Ops” game are released.
HMV makes all its annual profit in the six to eight weeks surrounding Christmas, he said.
‘Structural Pressures’
“HMV Live may be a high-growth story, but it lacks the scale, group-wise, to overcome the very immediate structural pressures the core retail business has from online,” wrote a Seymour Pierce analyst, Kate Calvert, in a note to investors. She lowered her recommendation to “sell” from “buy.”
HMV dropped 7.25 pence to 59.25 pence in London. The stock has retreated 36 percent this year, giving the company a market value of 251 million pounds ($387.6 million).
Finance Director Neil Bright is leaving in December to join Holidaybreak Plc, HMV said. A search for his successor is underway.
Waterstone’s same-store sales dropped 2.6 percent in the period, an improvement over the 6.2 percent decrease over the last fiscal year. HMV International same-store sales declined 8.1 percent.
Comparable sales at the company’s concert venues rose 8 percent. Live festivals were “below expectation” due to disappointing attendance at a new High Voltage event, the company said.
Fox said festivals were a “saturated market,” and the company would be looking to take over operations of existing festivals rather than start new ones.
To contact the reporter on this story: David Altaner in London at daltaner@bloomberg.net
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