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HMV entering administration

Update: HMV Canada owner reportedly interested in UK retailer

Update

The Financial Times has reported that HMV Canada owner Hilco has shown an interest in the struggling UK retailer.

Hilco has declined to comment on the report, and the FT has suggested that the retail group has not been contacted by administrators Deloitte.

Update

HMV has this morning confirmed that the group will continue to trade during the administration process and that shares in the company have been suspended.

"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," said HMV in a statement.

"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.

"It is proposed that Nick Edwards, Neville Kahn and Rob Harding, partners of Deloitte LLP, will be appointed as the administrators of the Company and certain of its subsidiaries.

"The Company's ordinary shares will be suspended from trading on the London Stock Exchange with immediate effect."

Original story

Last month, HMV's suppliers pledged 40 million in backing for the struggling retailer, even though its market value was just 14 million. Those suppliers apparently hit their limit, as the Financial Times is reporting that HMV is preparing to enter administration after another request to music labels, game publishers, and film companies--this time for 300 million--was turned down.

According to the report, Deloitte is being brought in to oversee HMV's administration and the fate of its 235 stores and approximately 4,350 employees. The firm is already serving as advisor to HMV's lending banks. Deloitte also handled the administration of UK electrical retailer Comet, which shuttered last month, costing 6,600 employees their jobs.

Recent years have seen the demise of a number of UK retailers, including Woolworths and Zavvi. Camera retailer Jessops also closed its doors last week.

Specialty chain GAME narrowly avoided being added to that list last year. It entered administration in March of 2012, but was salvaged by Baker Acquisitions, which picked the chain up and managed to save 333 of its more than 600 stores.

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Latest comments (21)

Sam Maxted Journalist / Community / Support 3 years ago
Unfortunately for HMV, I think the only surprise here is that it took longer than expected to happen.
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Sam Brown Programmer, Cool Games Ltd.3 years ago
I was killing time in town on Saturday, so I popped in to the local HMV for the first time in a couple of months. I saw the poster stating "25% off everything marked with a blue cross" on the door. When I got inside and saw everything had a blue cross on it I was worried something like this was imminent. Damn.
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Seems we all felt something in our water about this - I too went Saturday into the Troc HMV in London to give a once over - was surprised they spent so much on stupid stickers on all their product when it would have been easier to mark the products that were not discounted! Suppose they wanted to give staff something to keep them occupied!

I know the media will miss this, but there is also another victim - the GamerBase chain of public space game playing centers part of the HMV operation (recently acquired). This was actually a successful component, but the management saddled themselves with HMV thinking the were going to get exposure!
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Show all comments (21)
Bruce Everiss Marketing Consultant 3 years ago
Zavvi, Comet, Woolworths, Game, HMV. All went bust.

Obviously nothing to do with the total demise of physical media and its replacement with digital downloads.

Our industry lags a lot in this revolution because of the walled gardens of the heritage console platform holders which require physical media. But the shock when reality hits us will be a sight to see.
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Paul Johnson Managing Director / Lead code monkey, Rubicon Development3 years ago
This actually came as a surprise to me tbh. Not now I think about what they sell, but I was in there before christmas and the place was bloody packed!
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Morville O'Driscoll Blogger & Critic 3 years ago
Not now I think about what they sell, but I was in there before christmas and the place was bloody packed!
It's not so much how many people, but how many people with shopping bags. :/
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Adam Campbell Producer, Hopster3 years ago
No surprise, they've been heading in this direction for several years. Christmas just finished them off, just as it is killing other stores too...
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Daniel Amofa Account manager 3 years ago
I very much agree.

it should have happened years ago but they kept being saved and yet still failed to get with the times.

it could also be that the people in charge are very much out of touch. The high street is changing and very fast.
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Maybe it's heading the apple store direction.
One may Shop to browse; assimilate the merchandise and (even) convert to a (shops) brand/ Kool aid but backed by a decent online presence (with timely delivery, ease and convenience for day of release)

In store promotionals, and special swag/merchandise that comes with certain "limited editions" could still have the effect of having a force multiplier on the launch of a new game title (to complement a more digital centric game copy/download).

afterall, the hardcore gamer probably loves to explore the deeper aspects of a game IP, and the swag might jsut pull in a gaming virgin/newbie into a convert. Works for casual as well - look at all those Rovio plush toys! :)

Edited 1 times. Last edit by Dr. Chee Ming Wong on 15th January 2013 11:06am

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Lets face it, no one wants to stand in a queue to be served for stuff like this. I don't. All things being equal, humans like the path of least resistance. Aside from FOPP, and independents who operate in the DJ sector, the best way to find out about new music has always been music publications like NME. You don't find out about new music going into an HMV mega store. You never have, because the focus isn't expertise and a love for the subject. Its purely sales based.

Hopefully the FOPP side of the business will survive in a smaller more focussed form for music lovers.

Edited 2 times. Last edit by Sandy Lobban on 15th January 2013 10:39am

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K. Al-Hurby Producer/Designer 3 years ago
What Dr. Chee Ming Wong said,

I can't see any other way. There is definitely some sort of transition happening right now.

Edited 2 times. Last edit by K. Al-Hurby on 15th January 2013 11:06am

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Matthew Hill Head of Recruitment, Specialmove3 years ago
This is the best thing I've read on HMV by a long shot

http://www.philipbeeching.com/2012/08/why-companies-fail-rise-and-fall-of-hmv.html
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I'm quite surprised myself. I know many other similar stores have gone under recently, but to me that just meant that HMV had a more captive audience. I like to be able to go in and buy DVD's / Games from a shop, mainly due to my impatience, but also partly so that I can browse for something new. The trouble with ordering from Amazon, is that you generally have to know what you want first. :(
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Morville O'Driscoll Blogger & Critic 3 years ago
The trouble with ordering from Amazon, is that you generally have to know what you want first.
Jessops (who sold photography and camera equipment) recently entered administration and all their stores closed for the last time on Friday. One of the main points raised when they closed was that people were going in to have a test of their cameras, ask the staff questions, and then ordered the items they wanted over the internet, where they were cheaper. I have no doubt people used HMV in the same way.

I decided to have a glance through the Sheffield High Street store earlier, and found the Sanctuary Season 3 DVD set. Price? 40, before 25% discount. That's a little over $60 US. Amazon have it new for 17.99. That's just ludicrous. If I wanted new, Amazon is cheaper. If I want second-hand, then Amazon is way cheaper, or I could go across the road to CEX.

Edited 1 times. Last edit by Morville O'Driscoll on 15th January 2013 4:44pm

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Richard Archer Desktop Engineering Team Lead, Square Enix3 years ago
Agreed. I've always wondered how HMV sell anything when their prices, even by high street standards, are ridiculous. The two or three times I've bought something from HMV (going back a few years now) it's been an impulse buy due to some seemingly crazy 85% off or buy 3 for next-to-nothing kind of deal, and even then, I got home and found it was STILL cheaper on Play or Amazon.
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Nick Parker Consultant 3 years ago
I'm not sure it would have helped but HMV should have been a leading online specialist retailer by now with that brand.
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The thing is, people are more net savvy. And the way retail may survive is by being both specialist eg. Forbidden planet, have a amazing ease of access purchase system eg. smartphone to order online and link it via impulse buy (which can be discounted in store more than online).

So, you've just bought a old console or a new blueray player but want something to play/watch it with. drop into the store - you want it all now. But maybe, the only cost effective way is to have a automated system - which can be robotized, and have 1-2 really really helpful knowledgeable staff on hand - like a multi media butler....
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Oliver Birch Director of Marketing, Hothead Games3 years ago
This is particularly sad. I worked for His Master's Voice back in the 90's so always had a passion for the best entertainment retailer out there in my opinion.

Having also worked in boxed distribution at Pinnacle I have seen the decline of physical goods and although I am pained to admit it, I think the market is dictating destiny here. The majority of the next generation of gamers will want the games they play to be free initially, with options to spend more if they like it...and they won't desire a physical copy. The sense of physical ownership is less important to them.

I wish all staff effected the very best.
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James Verity3 years ago
you cannot run a high street store and online site with two different prices for the same product... many a time have I looked at HMV online saw the product I wanted, gone into the store only to find its 5 more on the high street to walk out with nothing and gone elsewhere altogether...

Game/Gamestation had the same fault (onlone side both shops being a stones throw from each other)... difference between online price and high street prices, sorry but customers don't want that!!!
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I think high street retailers have to start realizing that their only USP is marketing and actually start charging the suppliers to stock their products and hiring knowlegable staff that can be a first point of information/support for the consumer.

I still want to go into a store to browse and try before I buy even if ultimately I then purchase it online.

Offcourse with Facebook today announcing their graph search engine (what took them so long) which can use the information derived from users to determine the best products etc for you and what is going on with other social search engine tools (MiiUniverse among others) it's debatable if the high street even will have that purpose in a few years time.

@Bruce - But I honestly think the big portals that own the users (mostly the platform owners) will become more powerful in the future, not less.
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Andrew Goodchild Studying development, Train2Game3 years ago
"you cannot run a high street store and online site with two different prices for the same product... "
That's easily said, but it costs more to sell it in a shop than mailing out from a warehouse. Setting them at the same price means making no profit on the one bought from a store, or overpricing online, making you uncompetitive with the online only space.
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