HMV warns of probable banking agreements breach

HMV said in statement that current market trading conditions meant that the business faced “material uncertainties” and that there would be a “probable” covenant breach at the end of January 2013. The retailer added that it was in constructive discussions with its banks and was keeping them fully informed in relation to current trading.

In the 26 weeks to 27 October, total sales from continuing operations were down 13.5% to £288.6 million as sales were impacted by a disappointing release schedule of games and DVDs in summer 2012 as suppliers looked to avoid major events such as the Diamond Jubilee.

Although like-for-like sales fell by 10.2% in the period, the retailer said they had shown some improvement in the second quarter.

HMV, which operates around 230 stores across the UK, saw its pre-tax loss narrow in the period to £36.1 million, compared to a loss of £50.1 million in the previous year.

Chief executive Trevor Moore, who was recruited to the business from Jessops in September, said: “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.”

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The results come amid reports that HMV has received £40 million in financial support from its suppliers in a bid to keep the retailer stable over the crucial festive period.

As part of its turnaround strategy, the retailer has shifted its focus to selling specialist music and DVDS as well as a range of technology products such as tablet computers, iPods and headphones.

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