Music and book retailer HMV Group plc on Thursday (July 6) reported a sharp drop in profit in a fiercely competitive environment. After-tax profit in the year ending April 29 was £56.2 million ($

Music and book retailer HMV Group plc on Thursday (July 6) reported a sharp drop in profit in a fiercely competitive environment.

After-tax profit in the year ending April 29 was £56.2 million ($103.5 million), down 38.7% compared to the 53 weeks ended April 30, 2005. Like-for-like figures were not available.

The company said worsening conditions in retailing in Britain and a competitive marketplace contributed to the "very poor trading performance of HMV UK & Ireland and Waterstones, which together typically contribute around 75 percent of the groups annual sales and 90 percent of operating profit."

"The competitive pressure from the supermarkets and Internet retailers led to a loss of market share for HMV for the first time," the report said. "Similar competitive pressures also caused Waterstones to record a loss of market share."

HMV reported continuing difficulties in the nine weeks ending July 1 -- sales at its music stores were down 17% compared to a year earlier, and sales were off 6% at its Waterstones bookstores.

Sales for the year were £1.83 billion ($3.37 billion), down 5.7% on a like-for-like basis.

HMV operates 593 music, DVD and book stores in Britain, Ireland, Canada, Singapore, Hong Kong and Japan.

In early trading on the London Stock Exchange, HMV shares were down 3% at 168 pence ($3.09).


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