HMV Group confirms Waterstone's up for sale

Waterstone's: put up for sale by HMV Group
Waterstone's: put up for sale by HMV Group

HMV Group, the high-street entertainment retailer, has just confirmed to the City that it is "exploring strategic options" around a potential sale of its book publishing chain Waterstone's.

Today's announcement follows weeks of speculation about the embattled retailer, which has made a series of job cuts and closed 60 stores since the start of the year.

Earlier this month, HMV warned that trading conditions "remain challenging" and had been forced to turn to lenders ahead of publication of its full-year results next month in an attempt to renegotiate terms.

In a statement, HMV said: "In response to press speculation, the board confirms it is exploring strategic options in respect of Waterstone's and HMV Canada. There can be no certainty that any transaction will be concluded.

"The board also confirms that no discussions are taking place with respect to an offer for the group. 

"The group's lending banks continue to be supportive, our banking facilities remain fully available and the group is continuing to maintain a regular and constructive dialogue with its lenders."

The attempted sale follows discussions with banks about the group's position and comes ahead of its full financial year ending in April. A spokesman refused to be drawn on whether any interested parties had already shown an interest or if any timescales had been set.

An update on any potential sale is expected to be made next month.

Waterstone's launched in London 29 years ago and currently trades from more than 300 stores in the UK, Republic of Ireland and continental Europe (Brussels and Amsterdam).

HMV has been taking guidance from business specialist KPMG’s negotiating team since January, when the retailer was forced to concede weak trading conditions over Christmas might not be the temporary blip it had hoped.

The group’s profit before tax and exceptional items for its financial year were said to be "moderately below market expectations."

Sources told Marketing that HMV profits could in fact be as much as 30% down on the £45m forecast, in the region of £30m to £35m. In addition, due to a combination of changes in what the retailer terms "product mix and other working capital movements", net debt is expected to be "not less than £130m".

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