HMV chief rules out flotation move

HMV Media chief executive Alan Giles has dismissed talk of an imminent float of the book and music shops business as 'out of the question' in current stock market conditions. Announcing good progress in cutting debt and containing losses, Giles said: 'We've got very strong growth prospects, but I can't remember the last time a retailer came to the market.'

He also played down the chances of a trade buyer for the group, which comprises the Waterstone's bookshops chain and HMV music and video shops. 'I can't see any natural buyers. It would be a large amount for anyone to digest,' he said. The assets of HMV were bought for £800m in a leveraged buyout in March 1998. Talks to sell Waterstone's to Prudential's PPM Ventures fell apart in October when the two sides failed to agree a price.

The company reduced first-half pre-tax losses from £34m to £15.9m through higher operating profits and reduced interest charges. Underlying net borrowings fell by £95m to £473m as Giles cut working capital by running down stocks, negotiating better credit terms from suppliers and cutting spending.

But there was a slowdown in underlying sales at both chains between the first and second quarters. Like-for-like sales at HMV slowed from 11.5% to 8.5% while Waterstone's slowed from 2.7% to 1.9%.

Music sales were boosted by new releases from Kylie Minogue and Nelly Furtado and DVD movies such as Traffic and Seven. Harry Potter, Jamie Oliver, Margaret Attwood and Tony Parsons helped keep the tills ringing in the bookshops.