Pre-Close Update

Pre-close update

29 April 2010

HMV Group plc will today hold a pre-close conference call for analysts and investors in respect of the 52 weeks ended 24 April 2010, including a trading update for the last 16 weeks of the financial year.

TRADING UPDATE

52 weeks ended 24 April 2010

Ø Group total sales up 1.8%, including like for like sales down 4.3%

Ø Management is confident that Group profits before tax and exceptional items will be in line with market expectations*, comfortably ahead of last year

Ø Margin and costs tightly managed in anticipation of difficult fourth quarter, including a £2m profit on property disposals

Ø The Group's strong balance sheet means that year end net debt, after the acquisition of MAMA Group and 7digital, is expected to be approximately £67m

16 weeks ended 24 April 2010

Ø HMV UK & Ireland total sales down 8.2%, including like for like sales down 13.2%. Reflects very strong comparatives in this period in the previous two years, reduced levels of campaign activity this year combined with the impact of severe weather at the beginning of the period

Ø HMV UK's gross margins expected to be up around 50bps for the full year

Ø Improved trend at Waterstone's, despite the impact of severe weather, reflecting the initial impact of turnaround initiatives, with total sales down 4.3%, including like for like sales down 4.8%

Ø Acquisition of MAMA Group successfully completed, and integration on-track

Strategy update

Ø Launch of new entertainment-inspired fashion ranges on track for May, with all HMV UK stores to have new fashion offer and enhanced technology range by July

Ø Full roll out of Waterstone's range repositioning, local promotional offer and brand re-launch on track

Ø Growing in live: continuation of good trading across all venues; Birmingham venue to reopen as HMV Institute in September

Commenting, Chief Executive Simon Fox said:

"HMV UK, as expected, had a difficult fourth quarter, and we planned accordingly by tightly managing margins and discretionary costs. However, the severe weather in early January and reduction in campaign activity in favour of preserving margin further impacted the like for like out-turn. Therefore, I am pleased to be able to confirm that the Group's profit before tax will be in line with expectations, comfortably ahead of last year.

"We are focused on progressing our new strategy laid out on 26 March 2010 to rapidly evolve HMV's product mix, grow the new HMV Live division and continue to turn around the performance at Waterstone's. We remain confident that these initiatives will position the Group to achieve our medium target for a sustainable 4.5% net margin."

Notes

* Consensus expectations for pre-tax profit before exceptional items for the financial year ended 24 April 2010 is £74.5m, with a range of £67.5m-77.9m (Reuters Knowledge / HMV Group plc.)

Notes to table:

1. Like for like sales (decline) growth and total sales (decline) growth are stated at constant exchange rates.

2. HMV International comprises the results of HMV Canada, Hong Kong and Singapore. 

Preliminary Results for the 52 weeks ended 24 April 2010 will be on 30 June 2010.

Enquiries

** All enquiries on 29 April 2010 should be directed via Brunswick.