Knott departure was by mutual consent
Recently appointed HMV chief executive Simon Fox said he had 'no regrets' about joining the group three months ago, despite acknowledging that the music retail market is in structural decline.

Fox said: 'We accept that music is declining and need to replace it with other formats. We need to reinvent the HMV store and make it a more inspiring place to visit.'

He maintained the decline was the result of price deflation following increased supermarket sales and the lower number of CDs sold.

Fifty per cent of sales in the run-up to Christmas came from DVDs and HMV stores have increased in-store space dedicated to games from about 10 per cent last year to 15 per cent this year.

Fox said the group only had a handful of unprofitable shops, but would scale back its opening programme. So far this financial year 12 stores have opened.

Improvement plans also include the introduction of a group-wide loyalty card rewarding high-spenders, and the 'cost opportunities offered by a centralised supply chain'.

However, HMV is assessing some Music Zone stores following that retailer's collapse into administration last week.

Fox said: 'Music Zone had a turnover of£110 million and we would expect to be a beneficiary of a consolidating high street.'

Of the departure of Steve Knott, Fox said: 'He and I mutually agree that it is time for fresh thinking and fresh blood.'

Fox added that he felt it was the right for him to take control of the HMV in the UK and Ireland - the largest part of the group - at a time the market was 'changing structurally and fundamentally.' He anticipated starting the search for a successor to Knott within the year, but wanted to fully understand the business first.

Fox will provide a full update his plans to reinvigorate HMV Group on March 13.