HMV issues third profit warning of 2011

UK entertainment retailer HMV has issued its third profit warning of the year so far.

The chain warned, four weeks ahead of the end of the financial year, that annual profits before tax would now be around 30m. When it issued its second profit warning last month it predicted that profits would be "moderately below" its 45m target.

It says that "trading conditions have remained difficult".

Lenders have now granted HMV two months breathing space on debt repayments, with a reassessment now due in July.

Some are now saying that current negotiations with creditors can rightly be described as "life or death" talks.

"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," a statement read.

HMV is currently attempting to sell-off its Waterstones book chain. In January it also confirmed plans to close 60 HMV outlets.