LONDON – Iconic British music retailer HMV was fighting for survival Tuesday after slumping into administration, but its boss expressed hope the high street giant would manage to secure its future.
HMV announced Monday that it has appointed administrators Deloitte in an attempt to help it remain operational, placing about 4,350 jobs at risk after the company struggled throughout the critical Christmas holiday period.
The group’s 239 outlets, including nine Fopp-branded branches, will remain open while Deloitte attempts to find a buyer for some or all of the business, although store closures are likely. Gift vouchers are no longer being accepted. Britain’s economy is struggling in general meanwhile, with the threat of a triple-dip recession looming, contributing to the recent collapse of photography chain Jessops and electrical goods group Comet.
HMV Chief Executive Trevor Moore told journalists that he was “convinced” that the group had a place on high street and said management were working with Deloitte in a bid to ensure its survival.
“We remain convinced that we can find a successful business outcome,” said Moore, who was previously head of Jessops.” I am every bit as passionate about HMV as I was when I joined in September. I’d like to be involved in the business going forward if the opportunity presented itself.”
Industry experts argue that the 92-year-old institution has failed to meet the challenge of online retailing, digital downloading and fierce competition from rivals, and has been teetering on the brink for many months.
“HMV’s notice of administration was inevitable with online retailers, downloads (and rivals) combining to marginalize a brand which has become out-priced and outdated, despite its strong heritage,” said Julie Palmer, partner at corporate recovery specialist Begbies Traynor.
The company — the last major music and DVD specialist left on the British high street — has suspended trading of its shares on the London Stock Exchange. “The directors of the company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business,” HMV said in a statement.
In December, the company had announced that it was in danger of breaching bank loan arrangements.
“Since that date, the company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach,” it said Tuesday. “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.”
HMV has huge debts and last month reported sales down 13.5 percent, leading to a crash in its share price that left the company valued at about £5 million ($8 million). Shares closed Monday at just 1.1 pence.
Back in 2006, the group was valued at almost £850 million ($1.4 billion), since then it has offloaded British bookstore chain Waterstones amid the rising popularity of downloadable books. The firm, which operates out of 239 stores in Britain and Ireland, launched a monthlong sale Saturday offering 25 percent off a huge range of products to boost sales, but it was not enough to keep the administrators at bay.
“HMV did not react early enough to the digital trend; it did not give shoppers a reason to keep buying from it,” noted Neil Saunders, managing director of retail consultancy Conlumino. “Admittedly, the company has tried to innovate through selling more ‘electricals’ and gadgets but, unfortunately, these initiatives were never going to be enough to counteract the terminal decline in its core business.”