Snow hits HMV's festive trading

MUSIC and games retailer HMV said its full-year outcome was hanging in the balance after the start of the all-important Christmas trading period was impacted by snow.

HMV said so-called customer footfall in shops had been "significantly" affected by the arctic conditions in the past two weeks, coming at the start of its key festive season - which largely determines its full-year performance.

The group, which also owns the Waterstone's book chain, makes 60 per cent of sales throughout Christmas and the final four months of its year and is hoping to make up for difficult conditions in the first half.

Results today showed seasonal pre-tax losses widening to 41.3m in the six months to October 23 from 24.9m a year earlier after HMV UK and Ireland sales slumped 16.1 per cent.

Shares in the group plunged as much as 18 per cent on the gloomy half-year results, with news that HMV is halving its shareholder dividend payout also knocking the stock.

HMV said its sales plunged amid a "weak entertainment market", with games impacted particularly badly and as the World Cup slowed the pipeline of new releases earlier in the year.

But the group's woes were compounded by mounting competition for music and DVD sales from supermarkets, which has forced it into heavy discounting.

While it noted more encouraging trading at the start of the second half, progress was hampered by the recent severe weather conditions.

"The start to the Christmas trading period has been undermined by the severe weather of the last two weeks, which has significantly affected consumer footfall and consequently makes trading patterns hard to determine at this stage," said HMV.

It is pinning Christmas hopes on a line-up including Take That and Cheryl Cole albums, DVD releases such as Toy Story 3 and Shrek 4, as well as new games Call of Duty: Black Ops and FIFA 11.

But chief executive Simon Fox said the group would have to step up turnaround efforts for its HMV chain.

The group is branching into new areas such as technology sales, recently including Apple's iPad tablet, as well as entertainment-related products.

Under a recovery plan led by Mr Fox, HMV has pushed into fashion, mobile phones and Blu-ray discs, while its swoop for festivals and gig venue owner MAMA Group cemented its position in the fast-growing live market.

Mr Fox said: "Our sales performance during the first half leads us to conclude that we must accelerate HMV's product mix evolution, with a particular focus on technology, where the opportunity for range expansion in high-growth products is greatest."

Operating losses at HMV UK & Ireland more than trebled to 24.3m from 6.7m a year earlier.

However, the group said its revival plans at Waterstone's were on track as half-year operating losses improved to 9.9m from 12.9m.

Like-for-like sales at the book business fell 3.2 per cent, although this was weaker than the 2.6 per cent decline seen in the first 19 weeks of the period.

HMV has 412 HMV stores, 10 Fopp stores across five countries, with 311 Waterstone's outlets in the UK and Ireland.