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| Version 1 | Version 2 |
|---|---|
| HMV shares hit by credit insurance fears | HMV shares hit by credit insurance fears |
| (40 minutes later) | |
| Shares in HMV Group have dropped almost 7% after the music and book retailer confirmed some of its suppliers have had levels of credit insurance cut. | |
| However, HMV said it had experienced "no difficulty" in obtaining stock. | However, HMV said it had experienced "no difficulty" in obtaining stock. |
| A big UK manufacturer of CDs and DVDs told BBC business editor Robert Peston on Tuesday its sales to HMV were now effectively uninsured. | A big UK manufacturer of CDs and DVDs told BBC business editor Robert Peston on Tuesday its sales to HMV were now effectively uninsured. |
| Earlier this month, HMV said profits would be at the low end of forecasts after disappointing Christmas sales. | Earlier this month, HMV said profits would be at the low end of forecasts after disappointing Christmas sales. |
| Tough market | Tough market |
| "Credit insurers are reviewing the level of cover they provide on the group," HMV said in a statement. | "Credit insurers are reviewing the level of cover they provide on the group," HMV said in a statement. |
| "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." | "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." |
| Suppliers take out credit insurance to cover payments owed to them by customers. | Suppliers take out credit insurance to cover payments owed to them by customers. |
| So when insurance companies lower their credit limits, they are concerned about the ability of the supplier's customers, in this case HMV, to pay their debts. | So when insurance companies lower their credit limits, they are concerned about the ability of the supplier's customers, in this case HMV, to pay their debts. |
| The insurance companies would not explain the reasons they were concerned about HMV. | The insurance companies would not explain the reasons they were concerned about HMV. |
| Earlier this month, the group, which also owns Waterstone's bookshops, said it was closing 60 shops this year as a result of falling sales. | Earlier this month, the group, which also owns Waterstone's bookshops, said it was closing 60 shops this year as a result of falling sales. |
| The firm also said it was struggling to avoid breaching the terms of a bank loan. | The firm also said it was struggling to avoid breaching the terms of a bank loan. |
| The group has faced fierce competition from online retailers such as Amazon and iTunes, and has seen its share price fall almost 75% since June last year. | The group has faced fierce competition from online retailers such as Amazon and iTunes, and has seen its share price fall almost 75% since June last year. |