In a trading update today (1 March), the group warns that profit before tax and exceptional items for its financial year will be "moderately below market expectations."
Sources suggest that HMV profits could in fact be up to 30% down on the £45m forecast, as low as £30m - £35m.
In addition, due to a combination of changes in what the retailer terms "product mix and other working capital movements", net debt is expected to be "not less than £130m".
The group, which is already in the process of making , now does not expect to meet certain of its bank covenant tests when they are next tested in full year results in April.
HMV has therefore "commenced discussions with lenders regarding potential changes to the facility agreement".
Chief executive Simon Fox said: "Trading conditions remain tough, reflecting a difficult consumer environment as well the changing markets in which we operate. However, our business is adapting quickly to respond to these external factors, and we are confident that our plans will ensure its long-term and sustainable future."
The music and gaming retailer, which also owns Waterstones book chain, had blamed weak Christmas trading on "severe weather in the UK" in its interim statement in January, and hoped the situation would improve in the first quarter.
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