Sony’s CD manufacturing arm, DADC has warned record label managers of a quick and drastic reduction in the amount of credit insurance available to HMV suppliers.
Credit insurance is in place to protect a supplier should the retailer go bust.
Currently the group are currently going through a sales slump, which began during the recent period of cold weather. However, they are the only music and entertainment that is still left on the high street and therefore suppliers are keen to maintain a relationship with them.
HMV’s main competition these days comes from websites such as Play and Amazon, as well as supermarkets who have branched out into CD, DVD and games sales.
HMV has said: “In light of recent comment on credit insurance cover, HMV Group wishes to clarify that, following the peak trading period, credit insurers are reviewing the level of cover they provide on the Group.”
“We continue to maintain excellent relations with our suppliers and have had no difficulty in obtaining stock.”
However, investors are worried as this follows on from a very poor sales period for the group which resulted in them announcing that they would be closing 60 stores across the UK and Ireland.
A similar situation occurred for retail group Woolworths, and proved to be the final nail in their coffin.
However, senior retail analyst Matt Piner pointed out that “In the past Currys, Focus and Topps Tiles have also suffered such action and come through the other side.”