HMV sales lifted by demand for video games

Published on Friday 5 September 2008 13:45

HIGH street retailer HMV today bucked the wider gloom on the high street as it said demand for games such as Grant Theft Auto and Wii Fit helped lift sales.

The firm's HMV stores in the UK & Ireland saw comparable sales grow 4.3% in the 18 weeks to August 30, thanks to an increased focus on games and technology under its turnaround plan.

Games sales raced 50% ahead year-on-year in the period as the sector's popularity continued apace.

Group like-for-like sales grew by a more muted 1.3% after a 4.3% fall in comparable sales at its book arm Waterstone's, which is struggling against tough comparatives from last year's Harry Potter boost.

The group-wide growth also marked a slowdown from a 10.1% surge seen in the final 16 weeks of its last financial year, which put shares under pressure today, down 2%.

But HMV said the lower sales growth came in a quieter time of year and reassured that revival plans were on track.

It also looked to a robust line-up of expected Christmas top sellers for the key festive season, with a raft of music releases from the likes of Oasis, Snow Patrol and the Kaiser Chiefs, as well as games such as FIFA 09.

HMV said it was cracking on with its turnaround strategy and the roll out of new store formats, having opened the doors to its largest new style store to date yesterday, at the Liverpool One shopping centre.

It will also launch an HMV UK loyalty card scheme and second-hand games offering by the end of the year, while plans are in place to introduce MP3 digital downloading later this month.

HMV said excluding the impact of last July's release of Harry Potter and the Deathly Hallows – the last book in the series – Waterstone's comparable sales fell by 1.7%, with the overall group notching a 2.2% rise.

HMV chief executive Simon Fox said: "In what is, undoubtedly, a tough consumer environment, the solid start made by the group to the new financial year means that our plans are in line with the board's expectations and I remain confident that our strategic initiatives are on track."

Mr Fox unveiled a three-year overhaul last year to rescue the group as it struggled against plummeting music sales in the face of digital downloading and competition from supermarkets.

Having admitted it had been too slow to recognise the market changes, HMV embarked on a strategy to focus on big-selling games and consoles, push into digital music and online retailing, as well as revamp its store portfolio.

Its "next generation" HMV stores include digital download hubs, gaming stations and smoothie bars.

Alongside this week's Liverpool One opening, HMV has also opened a new state-of-the-art outlet at Worthing in West Sussex and has completed four more existing store refits at Aberdeen, Brighton, Norwich and Southampton.

The programme is also extending to its international HMV chain, with eight stores opened and refitted so far in Canada.

The overseas HMV business saw like-for-like sales rise by 2.9% in the 18 week period, leaving total HMV comparable sales up 4.1%.

Its Waterstone's business has suffered amid a weaker book market, although the group said it maintained market share.

The group is also launching offerings to help boost the book business and yesterday brought to market the Sony e-book reader in partnership with Sony.

Investec Securities analyst David Jeary said today's sales were in line with expectations and said there was hope for a good Christmas, despite tougher comparatives for the rest of the year.

He added: "HMV's self-help measures, including substantial cost savings and its push into games are underpinning full-year prospects despite the difficult consumer environment."

HMV has more than HMV 250 stores in the UK and Ireland and around 180 internationally, while there are more than 310 outlets in the Waterstone's chain.