Sales slow at HMV as consumers rein in spending

The cut back in consumer spending has hit HMV, the music, DVD, games and books retailer, after it said underlying sales had continued to grow but at a slower pace.

The retailer, which has completed the first year of its three-year turnaround plan, said sales on a same-store basis gained 11.4% in the last financial year, just 4.3% ahead in the first 18 weeks of this year.

However, at its Waterstone’s book chain, the slowdown has become a reversal, with last year’s 3.3% growth becoming a 1.7% fall once numbers are adjusted to exclude the exception success of the final book in the Harry Potter series. On that basis, group sales are up 2.2% against 7.3%.

Chief executive, Simon Fox, said the consumer environment is undoubtedly tougher. We can continue with low single-digit like-for-like sales growth, which would be a good performance compared to much of the High Street.

The group is banking on a strong Christmas period due to the line-ups of new releases in all the main categories of DVDs, music, games and books.

Before the end of the calendar year, the group is to introduce its loyalty card and make a major move into trading second-hand video games.

HMV intend to buy used games for cash but also offer a better price if consumers accept vouchers, which can then be spent anywhere in the HMV store.

Shares in the retailer closed yesterday at 131.75 pence, over the last 12 months, its shares have risen 11%. The business is valued at £531.5 million.

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