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Poor sales force HMV to cut profits targets, again

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HMV Group has published its second profits warning in just over a month today, as trading levels remain worryingly low.

The entertainment retailer has said that since its last update on March 1st 2011, sales have stayed below estimates and so it has cut its profit-before-tax target for the full-year period again, this time by about £10 million.

It also announced that it has been given a one-month extension to complete its relevant financial covenant tests by the retailer’s lenders, with a new deadline of July 2nd.

A statement released today read: “Since the group’s last update on March 1st trading conditions have remained difficult, and with four weeks of the group’s financial year to go, the board now expects profit before tax and exceptional items for the full year to be around £30 million.”

Previously, HMV confirmed that its net debt for the full year was expected to be no less than £130 million and it now claims that its newly agreed banking facilities will allow it to deliver the group’s strategy and will prepare it for future trading conditions.

Last month HMV confirmed that it was listening to offers for Waterstone’s, its bookselling arm, which has seen sales decline steadily over the last year or so.

March also saw Robert Swannell step down as the group’s Chairman, with Philip Rowley replacing him, and Ewan Pinder become its new Head of Technology.

More than 40 HMV stores have been scheduled to close due to underperformance and 11 Waterstone’s outlets were shut in February.

Today’s statement continued: “The group’s banking facilities remain fully available, the group’s lenders continue to be supportive and the group is maintaining a regular and constructive dialogue with them.”

Published on Tuesday 05 April by Editorial Assistant

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