Video game sales lifts HMV revenue

HMV Group, the UK's largest music retailer, said revenue growth accelerated in the fiscal fourth quarter as a boom in video game sales helped the chain win back shoppers from supermarkets and online competitors.

HMV advanced to the highest in 18 months in London trading after the Maidenhead, England-based company said revenue rose 10 per cent at outlets open at least a year in the 16 weeks ended April 26th.

The retailer is dedicating more store space to video games as demand soars for Nintendo's Wii, Sony's PlayStation 3 and Microsoft 's Xbox.

Gaming now accounts for about 18 per cent of HMV's sales. The retailer is “rapidly” regaining market share lost to supermarkets and online retailers, chief executive officer Simon Fox said on a conference call today.

“The supermarkets have been cutting back on their ranges, they've realized they can't make a lot of money in music,” Seymour Pierce analyst Freddie George said in a phone interview today. “They are also being less price aggressive.”

HMV, which also owns Waterstone's bookstores, rose as much as 17.5 pence, or 12 per cent, to 166.75 pence in London, the steepest intraday gain since January 24th.

Same-store sales growth accelerated from 9.4 per cent in the five weeks ended January 5th. Christmas sales were the strongest since the retailer's 2002 initial public offering as the overall UK games market expanded by 30 per cent, HMV said in January.

Excluding video games, same-store revenue still climbed 8 per cent in the fourth quarter, Mr Fox said.

Bloomberg