Credit insurers show their power yet again with HMV


Credit insurers show their power yet again with HMV

The channel knows only too well the impact that credit insurers can have on a business so the experiences of HMV will be all too familiar.

The high street seller of DVDs and music has seen its stock price drop to a record low after it revealed that credit insurers had cut limits.

The move comes on the back of HMV being honest about finding its commitment to meet banking covenants a challenge and now everyone wants to draw parallels between the music store and Woolworths and Zavvi.

This is part of the problem with credit insurers pulling cover it becomes a self fulfilling prophecy that a company that was perhaps facing some problems is then front page news and having its woes discussed by everyone forcing the share price down even further.

What this latest episode in the credit insurance industry might do is shine a bit more of a light on the power that there companies hold and the influence they can have on the health of a company.

HMV will tough it out and no doubt will bounce back and get those credit limits reviewed but in the meantime it is under attack and is going to possibly cost some jobs and cause some headaches. Already some retail analysts have branded the stores dull and you could imagine a rebranding might be in the offing as the high-street retailer is forced to react to the markets.

This was first published in January 2011

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