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HMV shares down after credit insurance review

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by Kay Mitchell
HMV shares down after credit insurance review

Music, books, DVDs and games retailer, HMV, has been dealt a further blow today after credit insurers have reduced the cover they are prepared to give to suppliers of the firm.

The news sent its shares down more than 11% in early trading to 23.25p.

In a statement today, HMV said: “Credit insurers are reviewing the level of cover they provide on the group.

“Whilst this has resulted in the reduction in the availability of credit insurance to certain of the company’s suppliers, our business remains a core channel to market for them.”

However, investors will undoubtedly be concerned after the withdrawal of credit insurance led to the collapse of iconic department store, Woolworths, as well as music and games retailer, Zavvi, back in 2008.

HMV, meanwhile, continues to struggle amid tough competition from supermarkets and internet companies, such as Amazon.

The chain recently announced plans to close 60 stores over the next year.

The announcement came after it revealed sales were hit by the recent heavy snowfall in December.

The retailer, which also owns Waterstone’s bookshops, said it is struggling to meet the terms of its lending agreements.

Like-for-like sales for the five weeks to 1 January were down 10.2% compared with last year.

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News posted: January 19, 2011

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