HMV in warning over future

HMV’s new boss yesterday warned that the entertainment group is in talks with banks over its future following worse-than-expected trading in the run-up to Christmas.

Chief executive Trevor Moore, who joined the group from camera chain Jessops, warned that current market conditions suggest the group will not meet expectations for the year to April.

As a result, the terms of its bank loans are not likely to be met in January and April, placing the future of the 238-strong chain under threat.

HMV said like-for-like sales fell 10.2% in the 26 weeks to Oct 27 as its pre-tax loss narrowed to £36.1m, (€44.6m) compared to £50.1m the previous year.

The dismal results come despite reports that HMV has received £40m in financial support from its suppliers in a bid to keep it going over the vital festive period.

HMV shares tumbled 39% after the results were published, giving the retailer a market value of just £10.1m.

Suppliers including Universal Music came to HMV’s rescue last January with a deal that helped the chain shed some of its huge debt pile.

Both music publishers and film studios are keen to see the struggling business survive as internet retailers like Amazon chip away at their profit margins.

It is understood that HMV has secured improved access to music and film suppliers’ back catalogues and is buying stock on consignment, meaning it pays only for products if it sells them.

Its struggle has seen it sell off several parts of its business, including the Waterstones book retailer, to reduce its debt pile, while closing loss-making stores.

HMV recently offloaded its Hammersmith Apollo venue in London for £32m, which thus enabled it to thrash out a new deal with lenders.

It said that sales in the first half of the year were hit by the light release schedule, as suppliers held back on significant product launches due to the Olympics.

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