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Music Executives Pledge Support For HMV

Seven of the country's top music executives have pledged their support for the embattled entertainment retailer HMV.

In a letter to The Times newspaper, the heads of recording giants including David Joseph of Universal Music, said they would support HMV through its difficulties.

"Nothing has changed in each of our individual trading relationships with HMV - it is business as usual.

"HMV is at the heart of our industry, and they have full support from all of us," the letter said.

One of the signatories on the letter, the chief executive of Ministry of Sound, told Sky's Jeff Randall Live it was important for his firm to stand up for HMV.

"They do a lot more than sell our music, they help us break artists," said Lohan Presencer.

"There are fewer and fewer music retailers on the high street - HMV to a large extent is the last man standing."

Mr Presencer added that HMV appeared to him to be a very healthy business, which was planning to announce profits of between £40-50m.

"It's not Woolworths (Xetra: 886853 - news) , it's a very different situation," he said.

The embattled retailer, has drafted in a leading accountancy firm to help it stave off a breach of its borrowing agreements amid growing pressure on the high street chain.

HMV, which also owns bookseller Waterstone's, has hired KPMG's debt advisory team to assist with a project that could include renegotiating some of the terms of its borrowing facilities with its lenders.

CD and DVD suppliers of HMV face tougher credit insurance terms amid the group's sales slump.

Sony (Stuttgart: 853687 - news) 's CD manufacturing arm, DADC, has informed record label managers of "a quick and drastic reduction" in the credit insurance available to HMV suppliers.

This uncertainty could lead to suppliers choosing to cease trading with the group.

Credit insurance protects a supplier should the retailer go bust.

HMV's saving grace is that it is the only music and entertainment retailer left on the UK high street.

Its (Paris: FR0010370163 - news) main competition comes from internet companies like Amazon and supermarket chains who have expanded into CD, DVD and gaming sales.

As a result, suppliers are eager to maintain trading relations with HMV Group (HMVMF.PK - news) , as it is a core element of CD and DVD sales in the UK.

HMV has said: "We continue to maintain excellent relations with our suppliers and have had no difficulty in obtaining stock."

Investors are wary as this issue comes just two weeks after HMV Group announced it would close 60 stores across the UK and Ireland (Berlin: IIK.BE - news) following a big fall in like-for-like sales over the Christmas period.

Matt Piner, senior retail analyst at Verdict said: "Suppliers are likely to tighten up payment terms and decrease the amount of stock they let HMV have.

"[This] proved the final straw for rivals Woolworths - however, this move in itself is not a death knell.

"In the past Currys, Focus and Topps Tiles (LSE: TPT.L - news) have also suffered such action and come through the other side."