Yahoo Finance HMV Sale: Price Cuts Ahead Of Bank Deadline
HMV is holding a massive sale from Saturday after admitting it could breach crucial banking conditions at the end of January.
The 25% Blue Cross Sale on CD’s, DVD’s, Blu-rays, box sets and games across 230 stores and online comes just weeks after the traditional Boxing Day sale.
Last month the company admitted it is likely to breach its banking covenant - throwing the entertainment retailer's financial future into doubt.
A failure to fulfil lending requirements often signals a company is close to administration, retail analyst Robert Clark told Sky News.
"A lot becomes clear after Christmas - the sale suggests that they didn't have a good one and are trying to reel in as much cash to tie things over," he said.
"I’m not sure how much time they’ve got. I don’t think they’ll be able to sway their bankers. Financial institutions (NasdaqGS: FISI - news) are less likely to show patience in this climate."
But HMV’s chief executive Trevor Moore said in December that closing more stores or placing the business into administration was not "part of our plan" and that the firm was in "constructive discussions" with banks about its performance.
HMV spokesman Gennaro Castaldo told Sky News the Blue Cross Sale was not unusual for this time of year.
"Normally we'd look to run a multi-buy campaign of some kind at this time of year, but we thought we'd freshen our promotional mix up a bit and try something a bit different that will hopefully stand out from all the other sale offers on the high street right now," he said.
The retailer has taken a huge hit in the face of competition from online retailers like Amazon and Play.
But analysts argue that HMV has failed to reinvent itself in the last 15 years and invest in its stores to keep up with the modern technology revolution.
In December, despite numerous promotions,it announced total sales had fallen 13.5%, while like-for-like sales were down 10.2% in the six months to October 27.
HMV reported a loss before tax of £37.3m - an improvement on the £48.1m loss over the same period the year before. But net debt at the 91 year-old company increased from £163.7m to £176.1m.
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