HMV issues profit warning
HMV has warned it will not meet its profit targets for the second consecutive time this year as the music and book retailer struggles with “tough” trading conditions.
The company has also said it is set to breach certain terms of its bank loan, although its lenders continue to be “supportive”.
HMV Group said trading conditions have not improved since January, when it reported that sales over the festive period fell 10.2% , and the company says it expects to miss forecasts of £45m in full-year underlying pre-tax profits.
The Group’s net borrowings are now markedly higher than expected, estimated at around £130m.
Shares in HMV nose-dived 23% on today’s trading update to a record low of 15.75p.
Chief executive Simon Fox says: “Trading conditions remain tough, reflecting a difficult consumer environment as well as the changing markets in which we operate.”
However, he adds that the business will adapt quickly to external factors and is confident its rescue plans will ensure a “long-term and sustainable future”.
The group is to close 60 stores as it looks to “reshape” its business in the face of further falling sales and profits.
