Financial News
- 15 January 2013, 7:29
HMV Calls In Administrators After Sales Drop
HMV has thrown in the towel after years of struggling to fend off nimbler rivals by calling in administrators in a move which puts more than 4,000 jobs in jeopardy.
As Sky News revealed exclusively on Monday evening, the board of HMV has served notice of its intention to appoint Deloitte to oversee last-ditch efforts to rescue the high street entertainment retailer.
Following a board meeting that lasted several hours, HMV directors, led by chairman Philip Rowley and chief executive Trevor Moore, decided the business could no longer trade without insolvency protection.
HMV had been in talks with its lenders until last week about a new financing package, the terms of which could not be agreed, according to insiders.
The company said: "On 13 December 2012, the company announced that as a result of current market trading conditions, the company faced material uncertainties and that it was probable that the group would not comply with its banking covenants at the end of January 2013.
"The company also stated that it was in discussions with its banks.
"Since that date, the company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach.
"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, and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect.
"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."
Trading in HMV's shares, which are now expected to be worthless, will be suspended this morning.
The appointment of Deloitte follows the accountancy firm's work on the collapse of Woolworths in 2008.
HMV has been caught between the encroachment onto its turf of supermarket chains such as Tesco and Asda, and the explosive growth of digital specialists like Amazon which are unencumbered by hefty real estate costs.
Chuka Umunna, the shadow business secretary, said the news of HMV's potential demise was "deeply worrying":
"HMV is a national institution that has been a feature of our high streets for over 90 years, so this news is deeply worrying.
"For the sake of HMV's employees, we hope a way can be found to keep the business going - the demise of this national institution would be a sad loss to British retail."
HMV traces its roots back to 1921, when Sir Edward Elgar, the renowned composer and conductor, opened its first store on London's Oxford Street.
Retail insiders said Deloitte is likely to be "inundated" with offers for parts of HMV's business, including its brand, but said it was unlikely that any buyer would emerge for the whole business.
what do you think?
Glynne Powell
Shame though - I have a fond memory of going in there with my pocket money and was thrilled to see their range of music and videos. It was expensive though I remember that. I feel sorry for the people losing their jobs.
Bernadette Griffin
Yes me too but i shudder now when I look at old prices on some of my CDs to think I paid £15 for some. I really hope that their off shoot Fopp which trades here in Manchester doesn't bite the dust either they have some good stuff.
davenlesley
Glynne Only one weeks pocket money to be able to buy at HMV. My you were well paid
Windows Live User
I grabbed a £4.50 tape(remember those?) of Fleetwood Mac "The Early Years". When Peter Green led the band and they were a real band playing Blues. Still got it and it plays well after alllllll these years
robert
Iposted a comment a few day's ago predicting H.M.V. would be next to go bust,sadly i was so right.If supermarkets were made to sell fruit,veg,and groceries,which is what they do best,then stores that are going bust may still be arround.Maybe if H.M.V.and COMET etc.had a grocery section and a fruit and veg section,newspapers,fags,lottery,a few clothes then they may just have survived a little longer and give TESCO,ASDA WALMART,MORRISONS and SAINSBURY something to think about.Afterall it's a DOG eat DOG world we are currently living in.
william Baker
Yet more grief caused by greedy supermarket chains selling Clothes, Booze now CD's outpricing other smaller retailers. When hardly anyone else is left they'll increase their prices no doubt leaving high street shops empty & boarded up.
davenlesley
William. So you have so much money you can afford to buy at the higher priced outlets just to snub your despised supermarkets. It is not a luxury many in this country can afford in the present economic climate.
Brian Holmes
I live in a medium sized town and there is now only one, and one only, place where you can buy a chart CD - Tesco. I was there yesterday, having a nosey, and I noticed one everyday item had been increased by a whopping 50%! Our town has now reached the tipping point and by the end of this year we fully expect nearly all the remaining shops to go out of business. The people will not support them but already they are complaining that they have no choice anymore and are at the mercy of the local supermarkets as their prices are going skywards.
davenlesley
Brian. We are lucky in that within a radius of 4 miles we have a Morrisons, Asda, Sainsburys & Tesco. That keeps prices competitive
Daren Weston
Such a shame
Ben Ralph
Trevor Moore strikes again! He was at Currys then moved to Jessops and left there for HMV. Be very afraid if he turns up at your company next!
Kelly Curtis
they used to charge more for their products because they had very low competition...what goes around comes around.
Paul
That is not true, cd's have dropped in price due to supermarkets using them as loss leaders (a title that makes no money but helps increase footfall) a chart cd to buy for a company like Hmv now has little or no profit in it. Why is it ok for music to get cheaper but everything else like groceries & petrol etc to rise in price. Your comment is ignorant.
Kelly Curtis
read the comments paul.most are saying very expensive shop during the eighties.
davenlesley
I always found that HMV were one of the more expensive shops and so this is no surprise really. With the internet shopping it was so easy to find goods more competitively priced and so it seems did many others
Paul
Why is it excepted that the online price for cd's should be cheaper than in store. It's not the case when you buy your food, electrical goods online unless its through amazon & we know how they get away with it...
davenlesley
Paul. It was also usually cheaper at the high street store 5 doors away from HMV so it wasn't just internet sales which did for them
David Francis
What I find disappointing about the high street problems is the apparent refusal by the landlords to accept lower rents for existing tennants. If a business cannot survive on the current rentals then the landlord should consider how easy it is to find a replacement tennant. If it is easy he can keep the rent the same. If not then he has to reduce the rents to either allow the tennant to remain or tempt a replacement. It would appear that in the current climate, replacements are not forthcoming - so why do they not reduce the rents to help keep these chains going?
Brian Holmes
Greed. But some are smarter. Someone I know who works for a letting agent says his firm is now letting out some commercial properties for zero rent. The main reason is that an empty commercial property attracts 50% rates here in NI. This way the landlord doesn't make any money but neither does he lose any.
peter
HMV were, and still are, brilliant. Young street wise staff who could never do more to help. Any enquiry was always dealt with, and with follow up if required. Another high street loss is looming. Sad. Peter. Holmfirth.
hugh japenos
it's been apparent for some years that the high street retail outlets have been struggling against on-line sellers, download or mail order. my local HMV branch had turned its main floors over to gaming and DVD/blu-ray, and moved the CDs to the basement; I was happy, as the prices went down with the elevation and it was nice and cool in the summer! I am of a generation that readily transferred its musical affections from vinyl to polycarbonate whilst retaining some nostalgia for the former format. many others insist that vinyl is audibly superior and more tactile; they're probably buying it mostly online now anyway. do young people now know or even care what HMV stands for? the logo is still a gramophone and attentive dog. I'll miss that basement if it goes; best of luck, His Master's Voice....
Mick Daniel
Poor model, poor management, have not moved with the time, on line competition, no public support - all spell failure. No point in blaming anything else, the Company should have changed many years ago. Very sad for those who will lose their jobs.
Diane Rogers
My son said atmosphere was awful at work today.His manager rang him at home last night because it was his day off yesterday to tell him what was going on.
David
Come on Orange.........this is still the headline story in this section? Surely SOMETHING must have happened in the World since then to warrant top billing in this section! Even our local "Rag" newspaper has more up to date stories than this! HMV is OLD news, a few others have hit the rails since then! Talk about finger on the pulse............NOT!
David
Ahh.........just been superceeded, nice to see an up to date story! :)
stevegs850
10:46pm on 14/1/2013
We are are in a transitional period where the manufacturing times were disposed of in the 70s and the country relied on the service industry,now a new era of high street endings will lead to cheaper online shopping and the store assistants will become delivery drivers on minimum wages and only when required for companys not even paying the correct taxes we are doomed,this will only last as long as the credit cards allow and common sense evenually takes over and people stop spending on rubbish they dont need,then the problems start.
Brian Holmes
10:30am on 15/1/2013
The Government is losing a massive amount of revenue as a result of all these big chains and many thousands of smaller high street businesses going bust. They see that business is transferring to online shopping and they will already be looking at ways to target that business to recoup the revenue shortfall. I predict that online sales will very soon be hit with a higher rate of VAT.