HMV shares fall in London trading
LONDON: HMV Group Plc, the music and DVD retailer that owns Waterstone's bookstores, fell the most ever in London trading after saying holiday sales are being hampered by severe winter weather and cutting its dividend by 50 percent.
Snow and freezing temperatures have "undermined" business in the last two weeks as Britons have put off shopping trips, the Maidenhead, Englandbased company said today in a statement. HMV also said its first-half loss widened due to weaker demand in U.K. and Irish stores. The shares declined 17 percent, the steepest intraday drop since a May 2002 initial public offering. Analysts at Investec Securities and Seymour Pierce said full-year profit estimates are likely to be reduced. The earliest widespread snowfall in the U.K. since 1993 has "dramatically undermined" retail sales, the British Retail Consortium said this week. "If customers can't get onto the high street of Britain it's going to affect everyone, including ourselves," HMV Chief Executive Officer Simon Fox said on a call with reporters today.
HMV said it reviewed its dividend policy "in light of the continuing weak entertainment markets, the uncertain consumer outlook and the consequent impact on the earnings profile of the group." The first-half payout will be reduced to 0.9 pence a share from 1.8 pence a year earlier. HMV shares dropped 7.25 pence to 36.5 pence in London, the lowest closing price since the IPO. The stock has fallen 60 percent this year and trades on a multiple of 3.4 times estimated earnings, according to data compiled by Bloomberg. The retailer is adding loyalty cards and diversifying into live music venues and festivals to boost sales as competition increases from supermarkets and online retailers. According to Verdict Research senior retail analyst Matt Piner, HMV needs to offset declining sales by exploiting its "strong brand name" in entertainment. -Bloomberg