HMV issues third profit warning

HMV issues third profit warning

The struggling HMV Group has bought more time to pass covenant tests while issuing a third profit warning.

The group, which owns Waterstone's, said "trading conditions have remained difficult" since it issued its last profit warning a month ago and admitted that full year profit before tax was likely to be £30m—£8m down on its last prediction. The figure is less than half of last year's profit of £74.2m and a third down on the £45m city analysts forecasted at the beginning of the year.

There was no mention of Waterstone's or its future in the statement. HMV Group said last month it was pursuing "strategic options for the chain", with analysts predicting the chain bookseller could fetch between £50-70m. A spokesman for HMV Group 's said it had no comment to add regarding Waterstone's.

The group is in debt by more than £130m but has managed to secure extra time to pass bank covenant tests from 30th April until 2nd July.

The HMV Group said: "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."

Shares in the group fell by 6.5% to 14.5 pence following the statement. They have now plunged around 80% in the past 12 months.

Kate Calvert, analyst with Seymour Pierce, said it was unclear how quickly the group might need to sell Waterstone's in light of the extra time it has been given to pass bank covenant tests.

She told The Bookseller: "The covenant test has been moved but we still don't know anything about it. The group will have to do something with Waterstone's sooner rather than later because it needs to raise money and pay down the debt."

The bookseller's founder Tim Waterstone, together with Russian billionaire Alexander Mamut, is reportedly looking at buying back the chain.