HMV being supported with £40m from suppliers

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Entertainment (LSE: ETO.L - news) retailer HMV is being backed over the vital Christmas trading period with funding of around £40m from its suppliers.

Music publishers and film studios are desperate to see the beleaguered high street chain prosper as internet retailers erode their margins and online piracy damages sales.

HMV, whose market value now stands at just £14m, is on Thursday due to publish its interim results and update on Christmas trading.

In September the company warned that sales were down almost 12pc but said that this should improve in the run-up to Christmas with the launch of products such as the Nintendo Wii console, a new One Direction album, and the Dark Knight Rises DVD.

According to industry sources, HMV is being helped in the run-up to Christmas by an estimated £40m of financial support from suppliers.

The backing follows HMV’s deal earlier this year to “change the nature” of its relationship with key suppliers such as Universal (Xetra: 859669 - news) and Disney (NYSE: DIS - news) .

It is understood that HMV has secured greater access to music and film suppliers’ back catalogues and is buying stock on consignment, meaning the retailer pays only for products if it sells them.

Suppliers have also taken a 2.5pc stake in HMV after activating warrants that were issued over the shares.

The retailer’s last financial results in August show it had already booked £15m to its income statement following the deal with suppliers.

Since then, Trevor Moore, the former boss of photography chain Jessops (Berlin: JS4.BE - news) who took over at HMV in September, has stepped up his efforts to win the backing of suppliers.

HMV, which was founded on Oxford Street in London in 1921, declined to corroborate the level of support from suppliers. The company said: “We would never disclose the nature of supplier relationships.”