LONDON (Reuters) - British music, books and games retailer HMV Group hopes rivals to the Ninetendo Wii will drive the games market in the key Christmas period after reporting a worse-than-expected plunge in first-quarter sales .
The departure of long-time Finance Director Neil Bright, who is highly regarded by analysts, and lingering concern over the strategy to become a broad-based entertainment group, offering live music and fashion alongside its other products, also hit its shares, which were down 11.3 percent at 59.17 pence at 0945 GMT.
Overall underlying sales at the group, excluding the new live music division, were down 10.6 percent, while sales in Britain and Ireland dropped 14.9 percent as the soccer World Cup took people's attention away from DVDs and books.
"Though they had warned that the AGM (annual general meeting) trading update today would be weak because of the impact of the World Cup, the news is still bad," said analyst Nick Bubb at Arden Partners.
Shares in the 89-year old group have far underperformed other retailers this year but had been gaining ground over the last three months, rising 14 percent against a 1 percent gain for the index.
Seymour Pierce's Kate Calvert cut her recommendation on the stock to "sell" from "buy," saying she was unconvinced by the new strategy and that the Live division would not be enough to offset the migration of HMV's core retail business to online.
Consumer confidence is still fragile in the United Kingdom. Department store group Debenhams said earlier this week it was cutting prices in a bid to attract wary shoppers and on Thursday, Argos owner Home Retail forecast a fall in first-half profit.
HMV hopes the benefits of its new strategy will be seen at the core Christmas trading period, when it makes all of its profit for the year.
Chief Executive Simon Fox told reporters new releases of motion sensor games consoles, like Playstation Move and Microsoft Connect, along with such games as Fifa 11 and Call of Duty Black Box, should help the market.
"The games market's been down about 15 percent over the period, but we expect it to get much closer to flat in the Christmas period as a result of these new products," he said.
FESTIVALS AND BOOKS
HMV added it was making progress in turning around its Waterstone's bookstores, with ebook sales up 70 and over 1 million books downloaded via the website.
"Since the World Cup, we've been in positive like-for-like territory," CEO Fox said.
However, he said the group had set its sights too high for its new High Voltage Festival, launched this summer and which suffered low attendance.
"Creating a brand new festival in a congested market is tough so our expansion plans for festivals are as much around existing brands and formats that are known to work," he said. HMV also announced the departure of Finance Director Bright, who is leaving after 14 years at the group for the role at leisure and travel group Holidaybreak.
Fox said he hoped to have a successor in place by the time Bright leaves at the end of 2010.
(Reporting by Victoria Bryan; Editing by Rhys Jones and Karen Foster)
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The departure of long-time Finance Director Neil Bright, who is highly regarded by analysts, and lingering concern over the strategy to become a broad-based entertainment group, offering live music and fashion alongside its other products, also hit its shares, which were down 11.3 percent at 59.17 pence at 0945 GMT.
Overall underlying sales at the group, excluding the new live music division, were down 10.6 percent, while sales in Britain and Ireland dropped 14.9 percent as the soccer World Cup took people's attention away from DVDs and books.
"Though they had warned that the AGM (annual general meeting) trading update today would be weak because of the impact of the World Cup, the news is still bad," said analyst Nick Bubb at Arden Partners.
Shares in the 89-year old group have far underperformed other retailers this year but had been gaining ground over the last three months, rising 14 percent against a 1 percent gain for the index.
Seymour Pierce's Kate Calvert cut her recommendation on the stock to "sell" from "buy," saying she was unconvinced by the new strategy and that the Live division would not be enough to offset the migration of HMV's core retail business to online.
Consumer confidence is still fragile in the United Kingdom. Department store group Debenhams said earlier this week it was cutting prices in a bid to attract wary shoppers and on Thursday, Argos owner Home Retail forecast a fall in first-half profit.
HMV hopes the benefits of its new strategy will be seen at the core Christmas trading period, when it makes all of its profit for the year.
Chief Executive Simon Fox told reporters new releases of motion sensor games consoles, like Playstation Move and Microsoft Connect, along with such games as Fifa 11 and Call of Duty Black Box, should help the market.
"The games market's been down about 15 percent over the period, but we expect it to get much closer to flat in the Christmas period as a result of these new products," he said.
FESTIVALS AND BOOKS
HMV added it was making progress in turning around its Waterstone's bookstores, with ebook sales up 70 and over 1 million books downloaded via the website.
"Since the World Cup, we've been in positive like-for-like territory," CEO Fox said.
However, he said the group had set its sights too high for its new High Voltage Festival, launched this summer and which suffered low attendance.
"Creating a brand new festival in a congested market is tough so our expansion plans for festivals are as much around existing brands and formats that are known to work," he said. HMV also announced the departure of Finance Director Bright, who is leaving after 14 years at the group for the role at leisure and travel group Holidaybreak.
Fox said he hoped to have a successor in place by the time Bright leaves at the end of 2010.
(Reporting by Victoria Bryan; Editing by Rhys Jones and Karen Foster)
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