HMV brand at risk as administrators called in

The future of the 92-year-old HMV brand is in question after the entertainment retailer called in administrators, putting more than 4,000 jobs at risk.

hmv

The 239 HMV stores in the UK and Ireland, website and 9 Fopp stores will continue to trade while Deloitte seeks a buyer for the brand.

The troubled retailer, which has seen sales ravaged by online rivals such as Amazon and Play.com and is widely seen to have been slow in exploiting the popularity of downloading, warned earlier this month it would likely breach banking covenants after reporting that sales slumped 13.5 per cent over the crucial festive trading period.

HMV, which opened its first store on London’s Oxford Street in 1921, has been propped up by suppliers such as Universal and Sony over the last year but the backing was not enough to avoid administration.

HMV says in a statement that it has been in discussions with banks and stakeholders since December “however, the board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection….”

About 4,350 jobs, including marketing and e-commerce director Mark Hodgkinson and his team, are at risk. Even if a buyer is found, analysts say it is unlikely a new owner will keep all 239 shops open if any at all.

Neil Saunders, managing director of Conlumino, says there is no future for HMV using its current business model.

“HMV remains, to this day, a respected and loved brand. Our emotional connection with music means that consumers, of all ages, will have fond memories of the store. However, emotions don’t pay the bills and the blunt truth is that HMV did not react early enough to the digital trend; it did not give shoppers a reason to keep buying from it.”

He adds: “The brand certainly has some value, however, while someone could arguably turn a profit in running some of the stores for a period of time they would still be betting against the future.”

HMV has been trying to rebalance its product mix, redesigning stores to highlight technology products. It also recently overhauled its multi-channel offering, providing customers with digital versions of physical products at point of sale, a click and collect service and in-store Wi-Fi.

Read Rosie Baker’s opinion on what will happen to the HMV brand next here.

Readers' comments (3)

  • I blame all of their staff for having too many tattoos (joke).

    unfortunately it was a matter of time before this happened, the music and gaming industry has changed forever and there is now no need to have retail shops in this industry.

    HMV you were warned time and time again to change your ways, too little too late.

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  • Agreed, and it also doesn't help when they do very little to compete with the online businesses other than shrugging their shoulders and saying 'they have less overheads'

    Bulls**t!, by being competitive with online retailers, they will grant themselves an edge by giving people instant access, all for the effort of taking a walk down to their local store!

    Forget them not embracing the digital side of things ( although it would have helped ), their overpricing in many cases is what did it!! Game are the same!!

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  • Not only ravaged by online outfits such as Amazon, iTunes etc but also by the bricks and mortar supermarkets! Attacked on two fronts, out flanked out gunned, it was only a matter of time before HMV went down.

    The only survival strategy was to go on line and just keep the big flagship stores as a brand promotion. Although even that didn't save Jessops.

    I suspect they won't be the last high street big name to go down this year.

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