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Slow pre-Christmas sales trigger financial warning

HMV warns it may not be able to cover bank payments

HMV has warned that it may not be able to cover its bank loan repayments, having recorded slow sales in the run-up to Christmas.

Although the company is confident that the signs are positive for 2013, total sales for the second half of 2012 decreased by13.5 per cent, falling to £288.6 million compared to £333.7 million in the same period of 2011.

Like-for-like sales fell by 10.2 per cent, while total sales for HMV Live were down by 18.6 per cent.

“Whilst I can see many future opportunities it is clear to me that the current market conditions, and in particular the volatility in the Group’s core music, visual and games markets, create uncertainty as to the level of trading results that can be achieved in the year ahead,” wrote HMV’s chief executive, Trevor Moore. 

However, he maintained that the company would be able to meet its future obligations: “In light of current trading performance, and market conditions, it is probable that the banking covenants will not be complied with at that time.

“However, the Group is currently operating within the terms of its banking facility and the Directors continue to maintain regular and constructive discussions with the Group’s banks. The Directors believe that the Group will be able to meet their liabilities as they fall due, including the £30m amortisation payment due in January 2013, and will have adequate resources to continue in operational existence for the foreseeable future.”

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