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HMV, One of UK's Largest Retailers of CDs, DVDs and Blu-rays, Calls in Administrators For Second Time in Six Years (bbc.com)
Retron shares a report: Music retailer HMV has confirmed it is calling in KPMG as administrators. The move, the second in six years, involves 2,200 staff at 125 stores. Owners Hilco, which took the company out of its first administration in 2013, blamed a "tsunami" of retail challenges, including business rate levels and the move to digital. It said the stores would continue to trade while negotiations were held with major suppliers and it looked for buyers. Paul McGowan, executive chairman of HMV and its owner Hilco Capital, said: "Even an exceptionally well-run and much-loved business such as HMV cannot withstand the tsunami of challenges facing UK retailers over the last 12 months on top of such a dramatic change in consumer behaviour in the entertainment market."
He pointed out HMV sold 31% of all physical music in the UK in 2018 and 23% of all DVDs and Blu-rays, with its market share growing month by month throughout the year. But he added that the industry consensus was that the market would fall by another 17% during 2019 and therefore it would not be possible to continue to trade the business. Holders of gift vouchers are being advised to consider spending them sooner rather than later.
He pointed out HMV sold 31% of all physical music in the UK in 2018 and 23% of all DVDs and Blu-rays, with its market share growing month by month throughout the year. But he added that the industry consensus was that the market would fall by another 17% during 2019 and therefore it would not be possible to continue to trade the business. Holders of gift vouchers are being advised to consider spending them sooner rather than later.
The ironic thing with this story is that 13 years ago, before Spotify and the like, HMV offered digital downloads (as did many other shops, like Tesco and Virgin Records). The downloads were clunky, required Windows Media Player and if you stopped paying the monthly subscription you lost access to the downloads entirely - they'd just redirect you to a login screen if you tried playing them. I only lasted two months as a subscriber back in the day as I realised I'd be stuck paying £10/month forever just to keep access to the tracks I'd downloaded. I still have the (now useless) WMA files as a souvenir!
The modern way of downloading music to keep (MP3s via Amazon, for example), is much better, as the music doesn't expire.
HMV barely changed its model from the last time it went bankrupt. It sells a few physical items like speakers, T-shirts, posters, figures etc. but its main business is still DVDs, CDs and console games and unsurprisingly these aren't selling as well as they once did.
That's a very biased and simplistic ways of looking at one of the possible outcomes. Or maybe it would happen along the lines of:
1. Be voluntarily appointed as the administrator.
2. Determine what if any of the business can be saved.
3. Inject capital in the form of a high risk loan and a controlling stake of how that loan is spent.
4. Turn the business around into a profit.
5. Recover the loan with interest.
Sometimes you even get number 6: Receive an award for the best turnaround of the decade. Though that isn't relevant in this case. Last time that happened was when this no name company called Hilco was appointed administrator of some music store called HMV 6 years ago and prevented the company from being liquidated. That is a completely different scenario.