HMV calls in administrators, putting 4,350 jobs at risk #UKEconomy #IN
15 Tuesday Jan 2013
This is a slight change to the usual Pension and Retirement focused updates we add, but we felt that HMV was such an institution for a number of Generations in the UK, it was something UK Expats would want to Know about.
We can’t imagine anyone that hasn’t shopped in HMV in the last 10 years for gifts or that ‘one’ Album you have been looking for everywhere! but I guess with their main focus being music CD’s, Games and DVD’s and the change in distribution of those industries to digital paid downloads, it was inevitable, but very unfortunate.
The below details were published in the Telegraph today:
The 92-year-old music chain has seen its sales eroded by fierce competition from online music retailers, digital downloads and supermarkets. It has also been saddled with £220m of bank debt.
HMV said talks with banks and stakeholders to try to avert an imminent breach of its banking covenants had been unsuccessful. Its shares were suspended with immediate effect. The chain’s administrators intend “to continue to trade whilst they seek a purchaser for the business”, HMV said.
The company had been expected to issue a crucial Christmas trading update this week. Ian Kenyon, its chief financial officer, told The Daily Telegraph on Monday night that Christmas trading had been “slightly behind expectations”.
Mr Kenyon said the chain’s suppliers had been “amazingly supportive” and were “working hard” to try to find a future for HMV on the high street.
Music and film suppliers, who want to see HMV survive as internet retailers erode their margins, have been crucial to keeping HMV afloat.It is understood they provided about £40m of support in the run-up to Christmas. However, it is thought they were not prepared to offer the level of help needed to save it from administration.
Private equity firm Apollo Global Management had been seen as a possible buyer for HMV after buying some of its debt, but yesterday was said not to be planning a takeover.
HMV had warned last month that its future was in “material uncertainty” and it was likely to breach banking covenants. Half-year like-for-like sales had fallen 10.2pc and the group posted a loss of £36.1m.
At the weekend it began a massive “Blue Cross” sale in an attempt to boost revenues, but it would appear that it failed to stem its haemorrhaging finances. News of the sale sent its shares down more than a fifth on Friday.
HMV raised cash last year by selling off book store Waterstones for £53m and the Hammersmith Apollo music venue for £32m. It has also shifted its emphasis from the fast-declining CD and DVD market to new technology products.
The demise of HMV is the latest blow to the high street, which has seen stores such as JJB Sports and Comet collapse in recent months. HMV’s chief executive, Trevor Moore, previously led camera chain Jessops, which fell into administration last week. HMV outlasted most other high street music retailers, with Woolworths and Zavvi both victims of the downturn in 2008.
Chuka Umunna, Labour’s Shadow Business Secretary, called HMV a “national institution” and described last night’s news as “deeply worrying”. HMV’s first store was opened in 1921 by Edward Elgar. It floated on the London Stock Exchange in May 2002, valued at £1bn and its shares hit an all-time high of 274p in early 2005. Last night they closed at 1.1p, valuing it at just £4.7m.