HMV: Hanging by a Hair

By Patrick Corby

HMV Group, which includes HMV and WHSmith, saw it’s share price fall by 40% on Thursday becoming the latest victim of tightening Christmas forecasts.

HMV Drops

The U.K’s biggest retailer of CDs and DVDs has not be an exception to continued losses and lower Christmas sales. HMV Group has stated it “may be unable to continue to realize assets and discharge liabilities in the normal course of business.”

The group is unlikely to meet forecasts for April next year due to the Christmas constraints. This would result in the same situation that Comet found itself in before it’s closure, bank loans unable to be met, credit will tighten and HMV might see a steady move towards closure.

As of October this year HMV’s pre-tax loss narrowed to £36.1m, compared with £50.1m in the previous year, despite a £40 million package from suppliers to support the company over the season. The company had estimated only a 10m loss in the period.

The company has faced competition from supermarkets and internet sites such as Amazon.com forcing it to reshape and align with the continued use of digital technology to download instead of purchasing CD’s and DVDs. HMV has tried to move into games, PCs and headphones to offset the market movement but with little avail.

This had created ‘material uncertainties’ for the 91 year old company that normally locks in 60% of its profits during the Christmas period.

The firm has made a series of sales to help reduce it’s debt. Selling the book chain Waterstone last year for 53 million pounds plus it’s HMV forum and The Hammersmith Apollo in London for £32m . The Group is currently in talks to sell off the last remains of it’s live business: the G-A-Y and Heaven clubs.

There are 12 more days till Christmas for HMV to secure profits enough to hold onto bank agreements.”Christmas gets later every year, people are also in search of the promotional offer and being very careful about where they spend their money,” Chief Executive Trevor Moore told Reuters.

HMV operates roughly 230 stores in the UK and still has hopes for the next 12 days. Without which it finds itself in a very vulnerable position.

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3 thoughts on “HMV: Hanging by a Hair

  1. Pingback: First Fall of 2013: A Snap Shot | Logic Tank

  2. Pingback: Amazon to hike fees, provoking fury among UK small sellers‏ | Logic Tank

  3. Pingback: One fifth of high street stores forecast to close within five years | Logic Tank

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