Waterstone's could 'turn positive' in second half

Waterstone's could 'turn positive' in second half

<p>Waterstone&#39;s can expect a rebound in profits but it is likely to be shortlived, according to a City analysis of parent company HMV Group. A briefing note by Seymour Pierce has a gloomy outlook for HMV Group, downgrading its shares from Buy to Sell and describing them as a &quot;value trap&quot;.</p><p>It was more positive about Waterstone&#39;s, saying it expected like for like sales to to turn positive in the second half of its current financial year. In Waterstone&#39;s most recent trading statement last week, it said like for like sales fell 1.6% in the 19 weeks to 4th September. The note said: &quot;Waterstones has picked up market share from the demise of Borders at the end of November 2009, adding several percentage points to LFLs according to management, and should benefit from weak comparables last year (poor release schedule in 2009).&quot;</p><p>However, it added that it expected like for like sales for the 10/11 year to be flat. It said: &quot;Waterstones&rsquo; profit rebound may prove short lived depending on how developments in the on-line book market impact the physical market.&quot;</p><p>Recent speculation has suggested former owner Tim Waterstone may buy back the bookseller or HMV Group may spin off Waterstone&#39;s. The report said: &quot;We do not believe the timing is right to break up the group, though would not rule it out longer term as we believe there are limited synergies between its two retail businesses.&quot;</p>