HMV hopes for stock market hit

HMV wants to sell shares to raise money to open more music and video stores

LONDON, England -- Music retailer HMV Group plans to go public to take advantage of improved market conditions and raise new funds to pay down debt.

HMV, which is 43 percent owned by music giant EMI Group, said on Thursday it hoped to list its shares on the London Stock Exchange by the end of June if market conditions remained favourable.

The company -- named after its trademark image of Nipper the dog listening to His Master's Voice of a gramophone -- operates 325 music and video outlets, as well as 197 Waterstone's bookstores.

HMV has not said how much it expects to raise from the flotation, but analysts say it could be as much as £600 million ($862 million), making it the biggest listing since life assurer Friends Provident went public in July.

Analysts expect the company will have a market capitalisation of more than £1 billion.

HMV's trademark image: Nipper the dog listening to His Master's Voice

HMV also said on Thursday that total store sales rose 8.1 percent in the 13 weeks to January 25. Sales at HMV outlets were up 9.1 percent, while Waterstone's sales rose 5.2 percent.

The company plans to use the money raised from the flotation to pay down its debt -- estimated at about £347.6 million -- and increase the number of HMV outlets and revamp its Waterstone's stores over the next five years.

EMI is expected to sell half of its stake before the flotation. It has been struggling to cut costs and improve earnings. Along with its rivals -- such as Warner Music, BMG, Sony Music and Universal -- EMI has been hurt by a drop in consumer spending due to the global economic slowdown.

London-based EMI, the world's third biggest music company, said profit before tax and one-time costs for the year ending March 31 is expected to be about £150 million ($214 million). Analysts had estimated a profit of between £160 million and £207 million, said EMI.