Music and films group HMV raised fresh doubt about its future after saying it will probably breach debt covenants next year amid continued losses and lower-than-expected Christmas sales.

The company probably won't comply with agreements on its borrowings in January and April, HMV said today in a statement, adding that full-year results are unlikely to meet expectations.

"This represents a material uncertainty which may cast doubt upon the group's ability to continue as a going concern," the Maidenhead, England-based company said in the statement.

HMV "may be unable to continue to realize assets and discharge liabilities in the normal course of business."

HMV shares plunged as much as 44 per cent in London, the most ever.

The company, which has been hurt by competition from supermarkets and online retailers such as Amazon.com, is reshaping its business as more consumers download music and movies rather than purchase CDs and DVDs.

"We continue to see HMV as a value trap with potentially insurmountable structural issues," Freddie George, an analyst at Seymour Pierce with a sell recommendation, said in a note.

Music producers and game developers delayed their release schedule this year as suppliers avoided adding new products during the London Olympics and the Queen's Jubilee celebrations, HMV said today.

The fiscal third quarter, when the retailer normally gets about 46 per cent of revenue, will be even more important this year as HMV seeks to boost sales, it said.

The company reported a net loss of £36.2 million pounds (€44.6 million) in the 26 weeks through October 27.

Bloomberg