Struggling music and books retailer HMV Group is looking into the possible sale of its Waterstone's books chain and Canadian business as it seeks funds to secure its future.
The 90-year-old firm, which has issued two profit warnings this year and said earlier this month it would fail a test of its year-end debt rules, said there was no guarantee any deals would be done and it was not in talks to sell the whole group.
In January, HMV Group, the company that owns both HMV and bookstore chain Waterstone's, announced plans to close 40 HMV stores in Britain and Ireland and 20 Waterstone's stores. An extremely poor Christmas season – traditionally the busiest period for the business – prompted the company to issue a profit warning for 2011.
Sky News today said the group had been approached by suitors interested in making an offer for parts of its business. Potential bidders are said to include retail restructuring specialist Hilco, which was focused on acquiring HMV's Canadian operations.
HMV declined to comment. Hilco was not immediately available.
Arden Partners' analyst Nick Bubb said investors should not expect any sale of HMV Canada to raise much money.
"Hilco ... will pay nothing for HMV Canada, which is now moving into loss. There is no alternative to having a big rights issue, so caveat emptor," he said.
Billionaire Russian businessman Alexander Mamut has been linked with a bid for Waterstone's, with the imminent initial public offering (IPO) of his mobile phone retail business Euroset set to bolster his war chest.
HMV said its lending banks remained supportive and it was in regular and constructive dialogue with them.
Profits at HMV Ireland plunged by almost 90 per cent to €465,000 last year compared to €4.1 million the previous year. Accounts filed for the Irish operations of the music giant for the year to the end of April 2010 show that operating profit stood at €400,000, down from €2.8 million the previous year.
The sharp drop occurred despite a 23.3 per cent increase in sales. Revenues climbed from €69.8 million in 2009 to €85.9 million last year.
Additional reporting: Reuters
