Music, DVD, games and books retailer HMV said severe weather was hitting Christmas trade, compounding problems caused by competition from grocers and the internet which have driven some peers out of business.
The British group posted a wider-than-expected first-half loss, a big increase in its debt and cut its dividend, sending its shares down as much as 29% today. With forecasters predicting more snow and sub-zero temperatures in the run-up to Christmas, chief executive Simon Fox said he was concerned about the short term trading outlook.
'Our stores are ready for Christmas. We have done everything we possibly can but if customers cannot get on to the high street it will be very serious for all retailers, including ourselves,' he said.
He said the outcome for HMV's year to end-April would be largely determined by the next four weeks of the Christmas trading period which together with the final four months of the year account for 60% of total sales.
The 89-year-old group has benefited in recent years from the demise of rivals like Woolworths, Zavvi and Borders. But it faces the same competition from supermarkets, online retailers and digital downloading that landed those businesses in trouble.
In March, it set out a strategy to boost profits focused on evolving its product mix, growing business in live music and ticketing, and improving Waterstone's margins.
HMV, which makes all its profits in its second half, made an underlying pretax loss of £41.3m for the six months to October 23, compared with analyst forecasts for a loss of £38-39m, according to a company poll. Sales fell 6% to £749.5m with sales at stores open over a year down 11.5%.
Underlying net debt surged 72% to £151.6m and the company halved its interim dividend to 0.9 pence a share.
Aside from the severe weather Britain's retailers are worried higher taxes and public spending cuts aimed at reducing government debt will hit consumer demand in the months ahead.
An industry survey this week showed British retail sales growth slowed in November, while yesterday electricals retailer Kesa said the market environment was 'increasingly uncertain' and computer games group Game said its profit margins would fall by more than it previously expected.
