HMV has announced it will be closing around 60 stores over the next 12 months as sales continued to wane over the Christmas period.

HMV Group said in a statement that the reduction in its store portfolio would help it to better manage its cost base as the business looks to adapt to an ever changing marketplace.

Slow trading over Christmas heading into what is expected to be a tough year for the retail industry as a whole has lead to the board issuing a warning four months before the end of its financial year.

The retailer, to make way for the arrival of American fashion retailer Forever 21, has already sold one store, in the prime location of London’s Oxford Street.

The group stated that “Compliance with the April covenant test under the group’s banking facility will be tight and the board is taking further mitigating actions during the next four months to address this.”

The decision came after like-for-like sales at the retailer in the 10 weeks to 1 January 2011 were down 13.3% year-on-year, with trading down most notably in the UK and Ireland where like-for-like sales dropped by 14.1%.

Simon Fox, CEO of HMV Group, commenting on the business year said, “ Whilst HMV has had a challenging year to date, it remains a profitable and cash-generative business and a powerful entertainment brand.

“The pace of change in the markets in which we operate underlines the urgency with which we must continue to transform this business.”

Please note the views expressed in this blog are the views of the author, Andre Brown and do not represent the view of Locayta, its employees or its shareholders. For more information about Locayta, visit www.locayta.com