Troubled HMV ‘may put its book chain up for sale’

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STRUGGLING retailer HMV could put its book store chain Waterstone’s up for sale as part of turnaround plans to be revealed to its banks this week, it was claimed yesterday.

HMV Group, which also owns the music and entertainment chain, is considering the sale after being told by lenders that it needs to raise £75m in return for a relaxation of its lending covenants, said The Sunday Times.

Potential buyers for Waterstone’s include founder Tim Waterstone, who may team up with Alexander Mamut, the Russian billionaire investor who owns a 6 per cent stake in HMV, said the newspaper.

Chief executive Simon Fox is also believed to be considering issuing more shares and further store closures in a bid to turn around the fortunes of the company.

HMV currently plans to close 60 Waterstone’s and HMV stores across its portfolio, which represents about 10 per cent of its total portfolio in the UK and Ireland.

Earlier this month the retailer said it would miss profits targets for £45m in underlying pre-tax profits and admitted it was set to breach certain terms of its bank loan.

Trading conditions had not improved since its last update in January, when it warned tumbling sales over Christmas would leave profits at the lower end of market expectations and reported a 13 per cent plunge in UK and Ireland like-for-like sales in the five weeks to January 1.

It confirmed last month that its suppliers were being hit by a reduction in credit insurance amid fears over the chain’s trading woes.

HMV has faced increasing competition from online retailers and supermarkets in its core CD and DVD markets in recent years.

The industry has lost two major high street outlets for its music following the demise of Woolworths and Zavvi.

But HMV rejects parallels with the previous casualties by pointing out that it remains profitable and continues to generate cash.

The group has broadened its product mix as part of a fightback, branching into new areas such as technology and entertainment-related product sales.

Its swoop for festivals and gig venue owner MAMA Group also cemented its position in the fast-growing live market.

Mr Fox is also expected to highlight plans to grow its technology retail arm, which sells iPads and blu-ray players.