'Difficult Markets' result in £30 million loss at HMV

A move to reduce prices of compact discs and DVDs to compete with Web retailers and supermarkets, perhaps, proved gloomy for the British music and book retailer, HMV Group Plc.

The Maidenhead, England based company today in a Regulatory News Service statement reported a first-half pre-tax loss of £29.1 million for the 26 weeks through October 28 after a profit of 100,000 pounds a year earlier. It posted a pre-tax loss including exceptional items at £36.4 million.

Steve Knott, HMV Managing Director for U.K. and Ireland will stand down from the end of January “by mutual consent”, officials reported.

However, the group reported an improved performance over Christmas with sales perking-up 10.3 per cent in the five weeks to January 6.

Blaming a difficult market for its disappointing performance, the company is planning for ‘profound changes’ to take place.

Undertaking Knott's responsibilities until a replacement is appointed, Simon Fox, the chief executive said, "The actions the group has taken to improve its competitive position are yielding benefits, but these are not sufficient to offset the profound changes taking place in our markets. We will do more to build upon the initiatives taken in 2006 to drive the business forward, and we will be updating the market with those plans in March."

With the group looking at dealing in categories that are more consumer attracting, the company confirms new product areas.

Moreover, the group continues to look at the potential for downloading terminals in store and is also considering 'fine tuning' some of its pricing.

HMV shares fell 1.5 percent to 144-1/2 pence, valuing the group at around 580 million pounds. However, the company maintained its first half dividend at 1.8 pence.

HMV, the famous trademark in the music business is abbreviated from 'His Master's Voice', and has a product lineup ranging from recorded music, videos, DVDs, books, to computer games.