...but retailers are still feeling the heat

MUSIC and DVD retailer HMV plunged further into trouble yesterday as it issued a third profit warning.

The embattled company saw its shares tumble by up to nine per cent, despite assurances that its credit facilities were solid.

HMV warned that profit before tax and exceptional items for the full-year would be around £30m.

That is £8m down on what the company estimated just a month ago.

However, the music retailer said its banking facilities “remain fully available” and lenders continue to be supportive.

It said lending tests would be held on 2 July rather than 30 April to give it more time to shore up its finances.

It said in a statement: “The group’s banking facilities remain fully available, the group’s lenders continue to be supportive and the group is maintaining a regular and constructive dialogue with them.”

Last month, HMV said it expected to fail tests set by its lenders if they took place in April.

The company first admitted in January that profits would be at the lower end of expectations, guiding investors then to expect £46m in profits before tax and exceptional items.

It further lowered expectations at the beginning of March, saying profits would not meet the market’s lowest expectations, which were then £45m.

Seymour Pierce analyst Kate Calvert said: “The speed of deterioration in profitability of this business confirms that management’s strategy is not arresting the very real structural pressures on the core retail business from online.

“More radical action is needed, we believe, in terms of store closures or breaking up the business.”

Last month HMV put its Waterstone’s chain of book stores up for sale, having already decided in January to shut 60 of its stores.

The company has been under intense pressure as consumers have moved to download music rather than buy CDs.

The past week has seen a flood of bad news from the UK high street, with off- licence Oddbins officially entering administration and Dixons issuing a surprise profit warning.

There were also disappointing updates from retail stalwarts Mothercare and Laura Ashley, and all eyes will be on Marks & Spencer’s sales figures this morning, which analysts expect to fall by around six per cent.