5 April 2011 – trading update

HMV has said that since the last update on 1 March trading conditions have remained difficult and it now expects profit before tax and exceptional items for the full year to be around £30m.   Negotiations with regards to amended borrowing facilities continue but the group’s lenders have agreed to move the measurement period for all relevant financial covenant tests from the 12 months ending 30 April 2011 to the 12 months ending 2 July 2011.  Banking facilities remain fully available lenders are said to be providing ongoing support.

It is clear that if HMV does manage to trade through the current tough period then there could be significant upside in the share price.   However, we feel that there are better opportunities elsewhere and maintain our WEAK HOLD verdict.