HMV faces 12 critical days to avoid banking breach
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HMV has "12 critical days" to pull in Christmas sales and help avoid a likely breach of its banking agreements at the end of January, the British entertainment retailer said.
The 91-year-old company said weak market conditions had created "material uncertainties" for the business, exacerbated by a worse than expected start to Christmas trading period in which the firm makes 60 percent of its sales for the whole year.
This would result in a probable breach at the end of January of covenants with its banks on its financial performance, it said on Thursday, also warning it was unlikely to meet analyst expectations for its full-year results, without giving further guidance.
It had been expected to post an annual pretax profit of between 7 and 10 million pounds, according to Reuters data.
Its shares lost more than a third of their value.
HMV, famous for its Nipper the dog trademark, has struggled in declining music, DVD and games markets and has been shifting its focus towards promotions and technology products like tablet PCs and headphones.
It said it was in "constructive discussions" with its eight lending banks, including keeping them informed of current trading, which it and other retailers hope will be boosted by a late surge in shopping before Christmas day.
It would not say what penalties it would face if it did breach its 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.
"There are still 12 critically important trading days until Christmas and being on the high street (town centre), if things do come late, is absolutely to our advantage because that's where the footfall will be.
"That Friday, Saturday, Sunday and Christmas Eve will be very important for the high street and very important for HMV."