HMV wipes out debt and stars on high street

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"That doesn't mean we won't," said chief executive Simon Fox today as he updated the City on a strong final four months of trading. "But we are still gaining market share, and there is a strong upcoming list of releases in games, DVDs, music and books."

Analysts tweaked their numbers higher after Fox said profits for the year to end-April would be at the top end of City forecasts, which had ranged from £46 million to £58 million. But what impressed them even more was that in the 18 months since Fox arrived from Kesa Electricals he has virtually eliminated HMV's debt, which stood at £140 million in April 2007. Of that, £60 million came from the sale of HMV Japan but the rest is from better cash generation and stock management.

Sales continued to grow strongly in the last four months of the financial year. UK and Ireland like-for-like sales rose

13.8% at HMVand 6.6% at Waterstone's. Group like-for-likes grew 10.1%.

Fox said that while games had been the runaway success, both music and DVDs had improved sharply. He added: "The momentum we saw through Christmas carried on. There may not have been too many blockbusters but there have been plenty of steady sellers."

In games, he cited the Nintendo Wii Fit, Guitar Hero and Grand Theft Auto IV, launched just after the year-end. In films, Atonement, Stardust and Ratatouille were big sellers with Juno, Sweeney Todd and No Country for Old Men about to be released. Duffy dominated music sales and will do right through to Christmas, according to Fox. HMV will roll out the new store format it has been testing on three sites, where it has seen much-improved sales.

Fox is to demand a rent rebate from BAA after mothballing one of his two stores at Heathrow's T5 because it is in the satellite serving long-haul flights, which have yet to be shifted to the troubled terminal.