Retail group HMV suffered a pre-tax loss of £27.5 million ($41.2 million) in the 26 weeks ended Oct. 25.
After the company’s interim results were published at 7am GMT this morning, HMV Group shares fell on the London Stock Exchange from last night’s closing price of £1.11 ($1.67) to £1.015 ($1.52) before recovering to £1.10 ($1.65) by mid-morning.
In a statement, the company said: “the markets in which we operate have weakened in line with general consumer confidence.” The slump follows a £28.7 million ($43 million) loss before exceptional items in the same period last year.
Chief executive Simon Fox said in the report that a decline in general retail footfall due to the impact of the global financial crisis had led to a slow-down in sales at the group’s powerhouse U.K. entertainment business.
According to Fox, “whilst high street retailing conditions are undoubtedly tough, at this stage in our financial calendar we still have our peak trading conditions ahead of us.”
The HMV report also referred to recent problems which have affected entertainment retail in the United Kingdom. It said: “Over the past two weeks there have been unprecedented changes to the competitive landscape of the entertainment sector, which we believe will strengthen HMV U.K. for the medium term.”
The past two weeks have seen the collapse of the Woolworth retail chain and entertainment wholesaler EUK, both part of the Woolworths Group. Supply problems caused by EUK going into administration (roughly equivalent to Chapter 11 bankruptcy in the United States) have affected several U.K. mass merchants and HMV’s main specialist rival, Zavvi.
According to the HMV announcement, its total sales rose to £754.5 million (1.13 billion) from £729 million ($1.09 billion) in the same period last year. Comparable stores sales, however, were flat, compared to a 5% rise in 2007.
HMV reported an increase in games and technology business, which accounted for 23% of sales in the United Kingdom and Ireland, up from 18% in the same period last year. HMV Canada reported a similar story, with games and technology accounting for 11% of sales, up from 4%.
HMV U.K. & Ireland total sales rose 6.1% to £417.5 million ($625.8 million), although the comparable stores sales increase was only 1.6%. At U.K. bookseller chain Waterstone’s, however, total sales were down 3.8% (3.1% on a comparable stores basis) to £235.1 million ($352.4 million).
The group did not break out figures for its online operations, but it claims that sales at its hmv.com site were up 20% on the same period in 2007, while sales at waterstones.com were up 50%.
At HMV International, which comprises 128 stores in Canada and seven in Hong Kong and Singapore, total sales rose 12.2% to £101.9 million ($152.6 million), with comparable stores sales up 1.7%. HMV Canada saw comparable stores sales rise 3.1% but declines in Asia saw the international division post an operating loss of £800,000 ($1.2 million), compared to £500,000 ($749,030) in the same period last year.
However, good news came in the shape of new bank funding which HMV says has been secured until September 2011 via a £220 million ($329.33 million) revolving credit facility.