HMV sees profits near top of range, shares jump
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Fri, 09 May 2008 08:03:05 GMT |
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By Mike ElliottLONDON (Reuters) - British music and books retailer HMV Group Plc said it was confident full-year profits would be towards the upper end of market expectations, driven by strong demand for games, boosting its shares by more than 6 percent."HMV has clearly benefited from a strong games market. However we continue to outpace this fast-growing market," Chief Executive Simon Fox told reporters on a conference call on Friday."It's a good market and we are certainly expecting double-digit sales growth from games in the year ahead."HMV, which owns bookseller Waterstone's as well as music shops under its own name, said group like-for-like sales grew by 10.1 percent in the 16 weeks to April 26, and by 7.3 percent for the full year.Like-for-like sales at HMV UK and Ireland grew 13.8 percent in the last 16 weeks of the year to April 26 and by 11.4 percent for the year as a whole.Fox said that stripping computer games out of the numbers, HMV UK's like-for-like sales growth was more than 8 percent in the 16 weeks, reflecting "accelerating market-share gains" in music and DVDs.Like-for-like sales at Waterstone's climbed 6.6 percent in the last 16 weeks and by 3.3 percent for the year.Shares in HMV, which have outperformed the UK general retailers' index <.FTASX5370> by around 102 percent in the past 12 months, were 6.4 percent higher at 158.75 pence by 3:35 a.m. EDT (0735 GMT), valuing the company at 624.3 million pounds ($1.2 billion).BROADLY DEBT-FREE"This is an excellent update ... HMV has clearly been in upgrade cycle for a little while now and today's statement may represent the pinnacle in terms of group like-for-like delivery," Kaupthing Singer and Friedlander analysts said."If management can persuade the market of the long term sustainability/attractions of the business, it could win over new investors. Otherwise we may see general profit taking into strength, which is what we suspect may be the case in the short term," they said in a note.Market expectations for pretax profit before items for the year to April 26 are in the range of 46 to 58 million pounds ($89.8 to $113.3 million), the retailer said in a trading update.That compares with profit of 48.1 million pounds last year."As we complete the first full year of our three-year turnaround plan, we are ahead of where we expected to be," Chief Executive Simon Fox said in the statement."We still have much to do, but I am confident that the group is well positioned for the next phase of our transformation."Fox also told reporters that thanks to the sale of its Japan business last July and strong cash management, HMV had ended the year "broadly debt-free."(Editing by Will Waterman and Quentin Webb)
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