HMV shares plunge as insurers reduce cover
Credit insurers have reduced the cover they are prepared to give to suppliers of HMV Group following a profit warning from the music, books, DVDs and games retailer, hammering its shares.
The withdrawal of credit insurance was a major blow to retailers like variety chain Woolworths and music retailer Zavvi as they tried, and failed, to stay in business during the recession.
HMV said on Wednesday it continued to have excellent relations with suppliers and had no difficulty in obtaining stock.
“Credit insurers are reviewing the level of cover they provide on the group,” it said in a statement.
“Whilst this has resulted in the reduction in the availability of credit insurance to certain of the company’s suppliers, our business remains a core channel to market for them.”
At 8.40AM HMV shares were down 11.4 per cent at 23.25 pence.
The company, which has been battling for years with cut-price competition from supermarkets and the internet and with trends towards downloading, issued a profit warning earlier this month, blaming severe winter weather.