HMV hits the wrong note again

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.

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HMV 16p; 12m change -76%

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