HMV issues profits warning

The music and books retailer also admitted it was set to breach certain terms of its bank loan and had opened talks with lenders in the hope of amending its banking terms. It said lenders continued to be “supportive”.

Given the scale of the challenges facing the firm, HMV said its chairman of two years, Robert Swannell, who was recently appointed to the same role at Marks & Spencer, was to be replaced by senior independent director Philip Rowley.

HMV said trading conditions had not improved since its last update in January, when it warned that tumbling sales over Christmas would leave profits at the lower end of market expectations.

The group, which also owns the Waterstone’s book chain, said it now expected to miss forecasts for £45m in underlying pre-tax profits.

The group said it now expected borrowings to be not less than £130m- significantly higher than expected.

Shares plummeted another 23 per cent on today’s grim news.

Simon Fox, chief executive of HMV, said: “Trading conditions remain tough, reflecting a difficult consumer environment as well the changing markets in which we operate.

“However, our business is adapting quickly to respond to these external factors, and we are confident that our plans will ensure its long-term and sustainable future.”

It hopes to secure new banking agreements that give it more headroom in the current trading conditions and support its strategy. The group is closing 60 stores over the next 12 months and shedding jobs, with aims to cut costs by another £10 million a year. It saw sales plunge 13.6% in the UK and Ireland over Christmas, and has since also been hit by supplier troubles.