HMV sees profit boost from strong games demand

By Mike Elliott

LONDON (Reuters) - British music and books retailer HMV Group Plc (HMV.L: Quote, Profile, Research, Stock Buzz) said it was confident full-year profits would be towards the top end of market expectations, driven by strong demand for computer games.

HMV, one year into a 3-year turnaround plan centered on "interactive" stores and more online sales, said it was also gaining ground in music and DVD sales, even as the overall market for CDs shrunk.

"HMV has clearly benefited from a strong games market. However we continue to outpace this fast-growing market," Chief Executive Simon Fox told a conference call on Friday.

"It's a good market and we're certainly expecting double-digit sales growth from games in the year ahead".

HMV, which owns bookseller Waterstone's as well as music shops under its own name, said group like-for-like sales grew by 10.1 percent in the last 16 weeks of the year to April 26, and by 7.3 percent for the full year.

Like-for-like sales at HMV UK and Ireland grew 13.8 percent in the 16 weeks to April 26, while at Waterstone's they rose 6.6 percent.

"HMV has released a strong full-year pre-close statement with the group seemingly seeing little of the ongoing high street slowdown," Numis analyst Nick Coulter said in a note.

Coulter, who has a 'Hold' rating and 160p price target on the stock, said the 11.4 percent rise in like-for-like sales at HMV UK in the year beat consensus expectations for 10 percent.