HMV shares plummet following news of upcoming sale

Shares in entertainment retailer HMV plunged 28.80 per cent to 1.10p at 14:04 on Friday afternoon following an announcement that the company would have a sale over the weekend.

The news comes less than a month after the company published its interim results disclosing that there was uncertainty as to the level of trading results that could be achieved in the year ahead due in part to the volatility in the group's core music, visual and games markets and current market trading conditions.

A spokesman at HMV, told ShareCast: "We are launching a Blue Cross sale on Saturday across the chain offering a 25% saving on a wide range of titles and products that will run for the remainder of the month."

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He added: "It's just a promotional event, not linked to anything else, at a time of year when there are no major releases and we're looking extend even greater value to our customers."

The December interim results stated that HMV's current trading performance was not in line with expectations and that the group was unlikely to achieve previous expectations for the full year.

"The next covenant test date under the banking facility is at the end of January 2013. In light of current trading performance, and market conditions, it is probable that the banking covenants will not be complied with at that time.

"However, the group is currently operating within the terms of its banking facility and the directors continue to maintain regular and constructive discussions with the group's banks," the interim statement continued.

The statement added further: "The directors believe that the group will be able to meet their liabilities as they fall due, including the £30m amortisation payment due in January 2013, and will have adequate resources to continue in operational existence for the foreseeable future."

MF