Falling sales and profits at HMV

Books and music retailer HMV has reported a 20% fall in annual profits to £98.2m ($180.3m) and warned that current trading remains challenging. HMV said that sales had been hit by competition from supermarkets and by more people buying products online.

The firm, which bought the Ottakar's book chain this year, saw like-for-like sales fall 5.7% in the year to April while current sales are down 10.1%. It has also announced plans to merge its Waterstone's and Ottakar's chains.

The move - which will expand the Waterstone's chain to more than 330 outlets - will result in a number of redundancies among Ottakar's staff, although the details have yet to be finalised. The firm is also cutting prices on CDs and DVDs, to bring them into line with those sold in supermarket chains such as Tesco and Asda. Prices will come down by more than 10%, with some newly released albums being sold for £7.95.

In the year to 29 April, total sales across the HMV group fell by £36.6m, or 2%, to £1.8bn. Like-for-like sales, which exclude stores open for less than a year and are regarded as a crucial indicator of a retailer's performance, fell 5.7%.

HMV warned that trading had deteriorated further in the early summer period, with like-for-like sales at its core HMV shops down 16% in the nine weeks to the end of June.

"As we expected, trading conditions in the first few weeks of the new financial year have remained difficult," said chief executive Alan Giles, who is set to retire later this year. "However, we are making excellent progress with a two-year programme of initiatives, which we anticipate will begin to improve performance during the crucial Christmas period," he added.

http://news.bbc.co.uk/1/hi/business/5153006.stm