9th May 2006 07:01
HMV Group PLC09 May 2006 Pre-close statement 9 May 2006 HMV Group plc will today hold a pre-close conference call for analysts andinvestors in respect of the year ended 29 April 2006. Management is confident that Group profits before tax and exceptional costs forthe full year will be in the middle of the range of analysts' expectations,which is £93m-£103m*. Total Group sales for the full year fell by 1.5% atconstant exchange rates, including 5.7% like for like. The Group continues to bevery cash generative. In January, the Group commented on the difficult sales trends in the UK in thefinancial year to date, and these trends have persisted during the balance ofthe year. In HMV UK & Ireland, like-for-like sales in the final 16 weeks weredown 11.4%, with Waterstone's down 5.6%. For the Group, total sales at constantrates declined by 1.4%, including like-for-like sales down 5.8%. The Group's UK businesses continue to make good progress on the key initiativesto improve performance, which were outlined in the update of 13 March 2006: • In HMV UK and Ireland, the provisional results of a new pricing and promotional strategy, which has been on trial in six stores in South Wales and Kingston-upon-Thames, are encouraging, whilst the greater emphasis given to games throughout the HMV chain has delivered a strong performance in this category • HMV UK successfully relaunched its transactional website in March following the relocation of fulfilment to Guernsey in November 2005, and has accordingly seen strong improvements in sales driven by increased traffic and conversion rates • Waterstone's is today announcing that it is terminating its partnership with Amazon, and in the autumn of 2006 will launch its own online service which will reflect better the brand's specialist bookselling credentials • The Competition Commission is expected to announce its final decision on the proposed merger of Waterstone's and Ottakar's by 22 May; the Board of HMV Group has yet to decide whether or not to make a new offer for Ottakar's plc. Once this situation has been clarified, as part of its commitment to creating shareholder value the Board will progress its review of the Group's capital structure and potential to operate the Group with a higher level of financial leverage. In the Group's overseas businesses, HMV Asia Pacific's recent good progress hascontinued, driven by improvements made to the merchandising of DVD and thestrength of the online business in HMV Japan, and for the full year total salesat constant exchange rates increased by12.0%, including 8.5% like-for-like.Against increasingly strong prior year comparatives and in a highly competitivemarket, HMV Canada increased total sales by11.0%, including 4.9% like-for-like. The Group continues to manage its costs aggressively, and in this regard both UKbusinesses completed restructurings in the fourth quarter. Further details ofthe exceptional costs associated with these actions, recent corporate activityand the impairment of certain fixed assets will be provided when the Groupannounces its preliminary full year results on 4 July 2006. The Board is making good progress on the appointment of a successor to ChiefExecutive Alan Giles, and a further announcement will be made in due course. ENDS * Reuters Knowledge Trading Update------------------ ----------------- ------------------ 16 weeks ended 52 weeks ended 29 April 2006 29 April 2006 ----------------- ------------------% Like for like Total Like for like Total sales growth2 sales growth2 sales growth2 sales growth2------------------ ---------- ------------ ------------- -------------HMVUK & Ireland (11.4) (5.6) (10.8) (5.0)Asia Pacific -adjusted4 8.9 12.2 8.5 12.0Canada5 0.0 7.9 4.9 8.8------------------ ---------- ---------- ------------ --------------Total HMV - adjusted4 (5.8) (0.4) (5.6) (0.5)Waterstone's (5.6) (4.8) (5.8) (4.6)------------------ ---------- ---------- ------------ -------------HMV Group - adjusted4 (5.8) (1.4) (5.7) (1.5)------------------ ---------- ---------- ------------ ------------- 1 The 16-week period ended 29 April 2006 covers trading since the previous trading update. 2 Like for like sales growth and total sales growth are stated at constant exchange rates. 3 HMV Group's like for like sales performance measures stores that were open at the beginning of the previous financial year (i.e. open at the beginning of May 2004) and that have not been expanded, closed or resited during that time. It includes sales from internet sites in the UK and Japan. Stores resized (up or down) are excluded from like for like sales performance. Sales are only ever the net amount received. 4 Total sales growth for the 16 and 52 weeks ended 29 April 2006 has been adjusted to exclude the effect of the disposal of HMV Australia on 28 September 2005. 5 The HMV Canada total sales comparative for the 52 weeks ended 29 April 2006 includes the results of HMV USA, where the last store closed on 3 November 2004. Excluding the closure of HMV USA, total sales growth for the 52 weeks ended 29 April 2006 was 11.0%. Contacts: HMV Group 01628 818 355 Alan GilesNeil BrightPaul Barker Brunswick 020 7404 5959 Susan GilchristWilliam CullumEilis Murphy This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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