HMV issues second profit warning

HMV Group has warned it expects profit before tax to be ‘moderately below’ the 45m market expectations for its financial year.

The retailer – which runs the HMV and Waterstones chains – is still finding trading tough for the first two months of the year, despite a significant upturn in sales during Half Term.

The company also announced its net debt will be at least 130m for the financial year.

Trading conditions remain tough, reflecting a difficult consumer environment as well the changing markets in which we operate,” says CEO Simon Fox.

However, our business is adapting quickly to respond to these external factors, and we are confident that our plans will ensure its long-term and sustainable future.”

Earlier this year HMV warned its suppliers that profits would be lower and that it might not be able to meet the financial year-end covenants it had agreed with its banks.

The firm now expects not to meet some of its covenant tests when its full year results are posted, and therefore the Group is in discussions with lenders regarding changes to the facility agreement.

The firm insists its lenders are being full supportive.