Music and book retailer HMV, owner of the Waterstone's book chain, has issued a fourth profit warning in six months. It said that earnings for the year to April would be around £40m, 46% down on the previous year. Net debt would be £130m, far higher than analysts had expected. The group also admitted that it expected to breach its banking covenants in April. Meanwhile, Robert Swannell resigned after a two-year stint as chairman. The shares slumped by 22% on the news and are at a record low.
What the commentators said
HMV stands for "His Master's Voice", said Phillip Inman in The Guardian, but it could also be called "hasn't much value". It will now be obliged "to go cap-in-hand to its banks" to renegotiate its debt. The group "doesn't seem to be able to downsize" as rapidly as its customer base is falling.
"The ground below HMV's feet is moving quickly," said James Thornton in The Independent. Supermarkets and online stores provide stiff competition in DVDs, CDs and books, while music downloads are also hurting the chain. It has tried to diversify into live concerts and music festivals. But these areas "have not been able to compensate for the inexorable decline" in the markets for physical films and music. What's more, given the economic outlook, discretionary spending is highly unlikely to give HMV a fillip. No wonder, said Thompson, that more and more retail analysts reckon it could ultimately go the way of Woolworths.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
HMV 16p; 12m change -76%
-
Trouble brews in B&M as bargain shops take a hitOpinion Once a stock market darling, B&M's share price has slumped. What has gone wrong for bargain shops?
-
US and China reach a ceasefire in their trade war after talks in LondonThe US and China's trading relationship – the most important one in the global economy – is back on track. Will the truce last?
