HMV profits from Game fallout

■ Full-year like-for-like sales down 11.4 per cent

■ Expects £16m loss in 2011-12, but £10m profit in 2012-13

■ Strategic view of Live business ongoing

HMV saw its shares jump 10 per cent to 4.1p after the entertainment retailer said it would return to profit in 2012-13, earlier than analysts had previously expected. The retailer said it will now make a £10m profit rather than the £5m loss previously forecast as a result of the disruption at rival Game Group.

However, despite the more positive news, which means we're taking the shares off a sell, we are still not convinced that it's worth buying just yet. At £168m, debt is nine times higher than HMV's market value of £18m and, although that will come down when the Live division is sold, the ongoing business still faces an uncertain future as entertainment distribution shifts online.

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