HMV shuts 60 shops in battle to survive

by James Hall, The Telegraph, 6 January, 2011

HMV Group, the retailer, will close around 40 HMV stores and 20 Waterstone's branches this year as it battles to revive its fortunes in a deeply challenging marketplace.

The retail group lost a fifth of its value yesterday after it said that like-for-like sales over Christmas fell sharply due to the poor weather.
Same-store sales at its HMV chain fell by 13.3pc over the ten weeks to January 1, while sales at Waterstone's fell by 2.1pc.

The retailer also warned that compliance with an April covenant test under its bank facility "will be tight". Full-year pre-tax profit will now come in at the lower end of market expectations.

HMV shares fell 6½ to 26p, having traded at just under 100p a year ago.

Simon Fox, the retailer's chief executive, said that appalling weather over the weekend of the 18th and 19th of December - the last before Christmas - meant that it was impossible for the chain to recoup crucial sales lost earlier in the month.
Full report at The Telegraph.

While The Bookseller reports:
Waterstone will not make approach for bookselling chain

Story by Philip Jones

Tim Waterstone (left) has reiterated his position that he will take a look at the business should Waterstone's parent HMV decide to sell it.

A number of analysts have insisted the HMV Group needs to restructure and reduce its debt by selling its bookselling arm following poor Christmas trading figures. But HMV Group has said the chain is not for sale, and its decision to close 60 shops will mean it will meet its loan requirements.

Speaking on Radio 5 Live last night, Waterstone repeated what he told The Bookseller in September, that he would not be interested in mounting a hostile bid for the chain but he would certainly look at it if HMV offered it up for sale.

When asked whether he would buy the business, Waterstone replied: "Here we go again, I wonder why you are asking me that." And added: "I'm certainly not mounting an aggressive [bid], but if they want to sell I'd certainly be interested in talking to them about buying it." Waterstone said he was "absolutely sure" there was a future for a high street book chain, with the book business "in very good shape". He stressed: "Will Waterstone's still be there in 20 or 50 years time, absolutely."

Though analysts are pressing for a restructure of HMV, publishers and former retailers spoken to by The Bookseller said that a sale of the bookselling chain would not necessarily be the best result for Waterstone's, and that private equity investors may not be interested given what happened to the Borders UK chain when it was bought out by Luke Johnson, and subsequently fell into administration. "It would need a man, with a very good plan," said one.

The Times reports today that Alexander Mamut, a Russian investor who has built up a 5% stake in the HMV Group, could take an interest in any break-up of the business. Mamut was reportedly an investor in a Russian book retailer alongside Tim Waterstone. According to an FT report published in December Mamut and Waterstone were both shareholders in Bookberry, a now bankrupt Russian bookstore chain.