HMV’s chief denies exit talk as retailer warns on profits

Simon Fox, the chief executive of HMV Group, was today fending off City rumours that he is poised to quit the embattled entertainment retailer.

Several sources have indicated that Fox has hinted at a desire to depart after six turbulent years at the helm during which the company share price has collapsed. It is thought he discussed the idea with at least one board member.

It is understood that Fox may feel he has come to the end of the road at the group, which needs to plan for a future that will be increasingly dominated by digital sales.

Fox today moved to quell the talk, however. He told the Evening Standard: “This is categorically not true that I have told the board I intend to leave.”

The rumours are the latest upheaval at HMV, which today warned on profits again after a 12.9% slump in underlying retail sales over the last 17 weeks.

Analysts say that the timing of Fox’s departure may be linked to the sale of HMV Live, which operates 13 venues, including the Hammersmith Apollo, and five festivals.

The group is thought to be in advanced talks with suitors to sell the live business for between £40 million and £65 million. This would enable the group to pay down a chunk of its debt of £168 million, including loans to Lloyds Banking Group and Royal Bank of Scotland, which would put the company on a firmer financial footing and help to pave the way for Fox’s exit.

If it gets the sale of its live business away, HMV could then appoint headhunters to find a new chief executive.

HMV today warned on profits for the second time in five months. The group expects to have made a pre-tax loss of £16 million for the year to April 28, compared with its earlier forecast of losses of £10 million. But HMV expects to make a profit of £10 million this year, citing an uplift in video games helped by the demise of the market leader Game Group, which was rescued out of administration on April 1.

Investment bank Citi is running the sale of HMV Live. Private equity firm Oakley Capital has reportedly tabled a bid to back a management buyout for about £40 million.