Troubled U.K. entertainment retailer HMV ended 2011 in much the same way that its year began: with falling sales and mounting speculation about its future.
The company's latest financial statement reports that the company suffered an 8.1% drop in like-for-like sales (which strip out the effect of shop closures) for the key five-week Christmas period ending December 31. Total retail sales for the same period fell 16.9% with HMV Group, which also contains a live division and digital operations, reporting a 16.6% drop. Sales figures were not included in the Interim Management Statement.
Although still alarming, the results do represent a much-needed improvement on the 13.2% like-for-like drop in retail sales that the company previously reported for the seven-week period leading up to December 17, 2011. HMV pointed to an overall decline in the games market over the holiday season as a key contributing factor to its disappointing holiday trading.
The company's strategy of focusing on high-end consumer electronics, with less floorspace given over to music product, does, however, appear to be succeeding. HMV reports that like-for-like technology sales climbed 51% in its 144 U.K. stores, which have been refitted to contain a higher number of tablet computers, MP3 players and accessories. HMV says that it sold 500,000 pairs of headphones in December and 20,000 tablet PCs.
"The continuing actions to focus the business and to expand our technology offering are beginning to show through," said HMV CEO Simon Fox in a statement. "We are seeing a combination of a slowing of the decline in music and film, and acceleration in the growth of technology. Undoubtedly trading conditions and the consumer environment remain challenging, but we remain confident in HMV's future prospects."
Last month, HMV announced that it was looking to sell its profitable live division to help reduce the company's debt obligations. As of December 19, when HMV reported its half-year financial results, the Group's net debt stood at £163.7 million.
HMV Live, which comprises 13 U.K. venues and has stakes in several British festivals including Global Gathering and London's Love Box, posted half-year operating profits of £3.4 million in 2011, up from £1.5 million the previous year. Although sales fell 1% in the five-week period leading to December 31, the company's live business remains a highly attractive property to investors, with Live Nation, Festival Republic, Warner Music, Sony, AEG and investment groups Pacific Global Management and Oakley Capital among the companies mooted to be interested. Citigroup has been charged with finding a buyer with the bidding process expected to begin in the next two to three months.