HMV Warns It May Breach Bank Agreements

HMV has warned of a “probable” breach of its current banking agreements next month, as continuing tough trading conditions mean the business faces “material uncertainties”.

The troubled music, films and games retailer gave the warning as it reported another fall in sales.

Its sales for the six months to 27 October were £288.6m, down 13.5% from a year earlier.

The pre-tax loss was £37.3m, compared with a £48.1m loss last year.

‘Market weakness’

HMV chief executive Trevor Moore said the company was continuing to “maintain regular and constructive discussions with the group’s banks”.

He added: “HMV has had a difficult first half. However, the business has started to deliver a number of new initiatives which will help to maximise the seasonal sales opportunity and provide a platform for growth in 2013.

“Additionally, as we trade through this period we will continue to develop further initiatives with our suppliers and I will provide updates at the appropriate time.”

Mr Moore only took up the top job in September, following the departure of his predecessor Simon Fox. Mr Fox left the company at the same time as former finance director David Wolffe.

During the six month period, HMV said its like-for-like sales were 10.2% lower than a year earlier. Sales of its CDs and DVDs were down 16% compared with a year earlier, by the same measurement, which the company blamed on “weakness in the market”.

By contrast, sales of its games and technology products were 6% higher, again on a like-for-like basis.

HMV has 238 branches, plus nine stores under the Fopp brand.

Earlier this year HMV announced that it would be selling its live business, so it could focus on the retail chain. The sale of its flagship Hammersmith Apollo venue in west London was subsequently completed in August for £25.7m.

HMV said in its half-year report that progress had been made on selling the remaining parts of the live business.

BBC