Embattled HMV is scaling back its fashion ambitions and has not ruled out closing more stores after a disastrous Christmas.
The entertainment retailer opened The Studio boutiques in 38 stores last September, selling fashion brands such as Lee jeans and Boxfresh, in a bid to widen its range as music sales came under pressure.
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However, fashion lines will not be rolled out to more stores, a source familiar with the situation said. Analysts said performance had not matched hopes. Entertainment-related apparel, such as band T-shirts, is selling “very well” and there is no change to plan. The shift came as HMV revealed a 13.6% like-for-like sales fall at eponymous stores and plans to shut 60 shops.
The retailer aims to slash 10% from its £150m rent bill by closing 40 HMV and 20 Waterstone’s shops in the next 12 months, largely where there are multiple stores.
Seymour Pierce analyst Kate Calvert said: “A break up of the business now becomes more likely and further store disposals are expected.”
The source close to HMV insisted there are no plans to sell “any parts of the business” but did not rule out more store closures. HMV warned that profits would come in at the low end of expectations and that it faces a “tight” covenant test in April.
The retailer blamed the snow and “challenging” entertainment markets for its poor Christmas. Chief executive Simon Fox said while HMV has had a “challenging year to date, it remains a profitable business”.