Twelve days to save Christmas as HMV falters

Kasmira Jefford
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THE FUTURE of HMV was thrown into doubt once again yesterday after the music entertainment retailer warned it is likely to breach its banking agreements at the end of January, sending shares tumbling 40 per cent.

The company said weak market conditions had created “material uncertainties” for the business, after a worse than expected start to the Christmas trading period in which it makes up to 60 per cent of its sales for the whole year.

It said it was in “constructive discussions” with its eight lending banks, including keeping them informed of current trading, which it and other retailers hope will be boosted by a late surge in shopping before Christmas Day.

HMV’s statement came as the group reported a £24.1m operating loss for the 26 weeks to 27 October, an improvement on the £33.2m loss posted a year ago.

The demise of Game has helped drive a six per cent increased in like-for-like sales of games and technology products. But like-for-like retail sales in music and DVDs fell by 16 per cent despite growing its market share in all categories.

Chief executive Trevor Moore, who joined from camera chain Jessops in September, said HMV has had “a difficult first half”.

“Christmas gets later every year, people are also in search of the promotional offer and being very careful about where they spend their money,” he said.

“There are still 12 critically important trading days until Christmas and being on the high street, if things do come late, is absolutely to our advantage because that’s where the footfall will be,” he added.

Net debt at the half-year rose to £176.1m. The group has been selling assets to pay down debt and earlier this month sold a chunk of its live music business for £7m.

It is due to make a £30m amortisation payment at the end of January.