In a surprise move, HMV U.K. and Ireland managing director Steve Knott is to stand down from the business by "mutual consent" at the end of January, the market-leading music and entertainment retailer said today (Jan. 11). From Feb. 1, group CEO Simon Fox will assume additional duties as managing director until a permanent successor is hired.

Fox has been with HMV for less than six months, having succeeded long-time group CEO Alan Giles in September 2006. Knott first joined HMV in 1990 as U.K. operations director; he was managing director of HMV Germany from September 1996 to December 1998, then left to spend three years as managing director of retailer World Duty Free (Europe), a subsidiary of the British Airports Authority. He rejoined HMV Group in November 2001 as managing director of Waterstone's and returned to HMV U.K. & Ireland in April 2003 to succeed managing director David Pryde.

Knott is currently chairman of U.K. trade body Entertainment Retailers Assn. (formerly BARD) and of charts compiler the Official U.K. Charts Company, which is jointly owned by ERA and the BPI. Knott is expected to tender his resignation from the ERA board during a meeting this coming Tuesday (Jan. 16), after which time Paul Quirk, founder of Quirk's Records and deputy ERA chairman, is expected to assume chairmanship of the trade group until a successor is appointed.

News of Knott's departure, which an informed source stresses was "entirely amicable," comes as the international merchant disclosed a 10.3% rise in group sales for the five weeks ending Jan. 6, 2007, although like-for-like sales were down 0.8% over the same period. Meanwhile, revenue at the company's U.K. and Ireland business was up 3.7% during the period, including like-for-like growth of 0.7%.

In its trading update issued to the London Stock Exchange, HMV Group painted a less positive picture for its business in its first half. For the 26 weeks ending Oct. 28, 2006, the company reported an operating loss of £24.5 million ($47.3 million), against a profit of £2.8 million ($5.4 million) in the corresponding period in 2005. A one-off cost of £4.2 million ($8.1 million) for "key strategic initiatives" -- which includes the relaunch of its download activities -- was accounted for in the latest update.

Group sales during the six-month period were up slightly at £767.2 million ($1.483 billion). However, like-for-like sales were down 5.5%. "The markets in which we operate continue to be very difficult," comments Fox in the statement. "However, we delivered an improved performances at Christmas, particularly at HMV U.K. where we achieved strong gains in market share."

Stock in HMV was down 4.43% to 140.25 pence in afternoon trading on the LSE.