No Christmas cheer at HMV as sales plummet
Music and games retailer HMV said its full-year outcome was hanging in the balance after the start of the all-important Christmas trading period was impacted by snow.
HMV said so-called customer footfall in shops had been "significantly" affected by the arctic conditions in the past two weeks, coming at the start of its key festive season - which largely determines its full-year performance.
The group, which also owns the Waterstone's book chain, makes 60% of sales throughout Christmas and the final four months of its year.
Results showed seasonal pre-tax losses widening to £41.3m in the six months to October 23 from £24.9m a year earlier after HMV UK and Ireland sales slumped 16.1%.
Shares in the group plunged as much as 18% on the gloomy half-year results, with news that HMV is halving its shareholder dividend payout also knocking the stock.
HMV said its sales plunged amid a "weak entertainment market", with games impacted particularly badly and as the World Cup slowed the pipeline of new releases earlier in the year.
But the group's woes were compounded by mounting competition for music and DVD sales from supermarkets, which has forced it into heavy discounting.
While it noted more encouraging trading at the start of the second half, progress was hampered by the recent severe weather conditions.
It is pinning Christmas hopes on a line-up including Take That and Cheryl Cole albums, DVD releases such as Toy Story 3 and Shrek 4, as well as new games Call of Duty: Black Ops and FIFA 11. The group is branching into new areas such as technology sales, recently including Apple's iPad tablet, as well as entertainment-related products.
Operating losses at HMV UK -amp; Ireland more than trebled to £24.3m from £6.7m a year earlier.
However, the group said its revival plans at Waterstone's were on track as half-year operating losses improved to £9.9m from £12.9m.
Like-for-like sales at the book business fell 3.2%, although this was weaker than the 2.6% decline seen in the first 19 weeks of the period.
HMV has 412 HMV stores, 10 Fopp stores across five countries, with 311 Waterstone's outlets in the UK and Ireland.
The music chain recently opened a new store at The Outlet shopping mall near Banbridge, Co Down.
HMV's pre-Christmas warning followed figures from the British Retail Consortium which showed a slowdown in retail inflation for the first time in five months.
The industry has also warned of sharp price hikes in the new year.
Shop price inflation fell to 2% in November from 2.2% in October as Christmas sales began early. Food price inflation eased to 4% in November from a 17-month high of 4.4% and non-food inflation slowed from 1.1% to 0.9%.