Late sales surge keeps HMV on track

Music and books retailer HMV maintained a cautious outlook for UK consumer spending today despite a 6.4% hike in underlying sales at Christmas.

HMV said a “very late surge in demand” had kept it on course to meet its full-year targets after weak trading conditions hurt sales in November and early December.

Albums by U2 and the Scissor Sisters helped like-for-like sales at its core HMV stores in the UK and Ireland to rise by 4.3% in the five weeks to January 8.

HMV said its share of the DVD market was strong on the back of best-sellers such as the Little Britain comedy series and screen blockbuster I Robot.

The reassurance came after weak demand for autumn blockbusters at high street chain Woolworths had jangled market nerves ahead of today’s update.

The Christmas data, which also covers the Waterstone’s book chain, was released at the same time as interim results showing a 23.3% rise in half-year profits to £13.3m (€18.9m).

Further encouragement for investors came as HMV announced a 31% hike in the interim dividend to 1.7p and flagged its intention to buy back some of its own stock.

Chief executive Alan Giles said HMV had delivered a “very strong” festive performance and margins were in line with group expectations, although lower than a year ago.

He said: “Whilst trading at Christmas was strong, we take a cautious view of the outlook for the UK consumer economy but expect it to prove sufficiently resilient for us to meet our financial targets for the full year.”