HMV has warned it will probably breach its lender covenants in January.
The firm reported a 36.1m loss for the 26 weeks ending October 27th. But says it is having ‘constructive discussions’ with its banks.
This isn’t as severe as last year’s loss of 50.1m, and the firm says it has increased its market share in all formats it operates in (music, video and games).
However the firm’s debt has increased from 163.7m to 176.1m. The company blamed the disappointing summer release schedule for falling sales, although the retailer is operating in spaces that have suffered severe declines this year, in the case of video games, software sales have fallen 28.2 per cent so far this year.
HMV has increased its market share for games and has seen its like-for-like sales increase six per cent following the closure of GAME stores. However, this was deemed ‘disappointing’ by the retailer.
However, the retailer has deemed this performance ‘disappointing’
According to reports, HMV has received 40m in supplier support this Christmas.
HMV has had a difficult first half," said new CEO Trevor Moore However, the business has started to deliver a number of new initiatives which will help to maximise the seasonal sales opportunity and provide a platform for growth in 2013.
"Additionally, as we trade through this period we will continue to develop further initiatives with our suppliers and I will provide updates at the appropriate time."
He added: "Since I joined, alongside Ian Kenyon, our new Group CFO, I have spent my first few months meeting all of our key suppliers, our banks and key management.
"I have spent a lot of time visiting our stores, talking to our store colleagues and really understanding the business. I recognise that the Christmas trading opportunity is hugely significant to the business and I have concentrated my effort, and my management team’s effort, on delivering a strong trading performance over this important period.
"I joined the Group because I believe it has a strong future. HMV’s UK stores attract more than 170 million visits a year and the website attracts over 50 million visits. The business has significant customer awareness and remains the leading entertainment retailer on the High Street. The business has a great history and a strong store portfolio and has access to entertainment franchises that are recognised worldwide."
HMV’s increased debt comes despite selling off much of its Live music division for nearly 40m.