Entertainment giant HMV has posted challenging first half results, and admits it may have to sell its Live music division.
The company's Board says it has regular discussions with its banks and is confident in the Group's ability to continue. But admits that the economic and traditions conditions "may cast significant doubt on the Group's ability to continue as a going concern."
The firm's total sales for the 26 weeks ending October 29th are down 17.6 per cent to 364.9m compared with 2010 (when it was 442.7m). The Total Group loss for the period is 50.1m.
HMV Retail's total sales were down the most by 19.4 per cent. HMV Live, however, made a profit of 3.4m. Up over the 1.5m made during the same period in 2010.
As a result, HMV's net cash flow has been hugely reduced to 12.6m, and its debt has increased to 163.7m.
Christmas sales are also down. For the seven weeks to December 17th, HMV Retail sales are down 13.2 per cent. But this figure does not include Christmas Eve, which falls on a Saturday this year and is expected to be a key selling day.
HMV's Christmas performance has also been aided by support from suppliers (primarily music and DVD), which has allowed the chain to be more competitive on price than in previous years.
The troubled retailer is now investigating the need to sell off its Live music division to strengthen its financial situation. HMV Live has been a growing part of the specialists' business, but has yet to generate significant revenue. The company saw attendance to its Summer Festivals increase 30 per cent, while it has just opened a 1,500 capacity venue in Manchester.
HMV has recently refitted its stores to focus a little more on technology. As a result, like-for-like technology sales have risen 42 per cent. Sales of headphones, speakerdocks and tablets have actually risen 147 per cent. The firm says it will continue to focus on these areas.
CEO Simon Fox said in a statement: This has been a challenging start to the year. However, we have taken decisive action to restructure the business and are now seeing the benefits of this, particularly in our Technology products business. Like all consumer-facing companies we are facing tough trading conditions but we continue to push forwards through this period. We remain well prepared for the key trading days ahead.”