Insurance move adds to HMV's woes

Insurance move adds to HMV's woes

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HMV has confirmed its suppliers are being hit by a reduction in credit insurance

Embattled music, books and DVD retailer HMV Group has confirmed its suppliers are being hit by a reduction in credit insurance amid fears over the chain’s trading woes.

The group said some of its stockists had seen the availability of cover slashed as credit insurers – which protect suppliers if their customers go bust – put insurance for HMV under review.

Shares in HMV slumped 12%, compounding heavy falls seen earlier this month after it reported dire Christmas trading and revealed it was struggling to meet the terms of a bank loan.

HMV posted a 13.6% plunge in UK and Ireland like-for-like sales in the five weeks to January 1, warning profits for the year to April would be near the bottom of City forecasts.

The withdrawal of credit insurance was one of the main triggers behind the demise of high-street retailers such as Woolworths and Zavvi. Without cover, suppliers are trading at their own risk.

HMV, however, offered reassurance over the impact of the insurance troubles.

A company statement said: “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.

“We continue to maintain excellent relations with our suppliers and have had no difficulty in obtaining stock.”

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