Following the announcement in January that UK’s once giant music retailer HMV would be going into administration, since then the chain has continued to slide downhill. The collapse now continues, with Deloitte, administrators for the stricken music chain, now looking to sell the remaining 116 stores to a new investor by March 25th, reports NME.
The race is on to sell off the remaining stores, with the administrators keen to get it done before rent bills worth tens of millions of pounds are due. Offers reported to have been put forward for the retailer include bids from supermarket chain Asda and US-based restructuring firm Hilco, which owns HMV Canada.
It’s reported that Hilco, who are the largest creditor to the ailing UK retailer, are close to announcing a deal that will see it handpick the best locations of HMV’s remaining stores and the seven Fopp stores now also under Deloitte administration.
Fopp is another chain of music stores in the UK owned by the HMV Group, forcing it into administration along with HMV in January.
As NME reports, at least four unnamed investment groups and private equity firms were interested in buying the seven remaining Fopp stores from HMV, with six HMV stores already being sold to supermarket chain Morrisons earlier this year.
At the time of administration, HMV had 4,932 employees and 222 stores, including nine Fopp outlets. On top of which 73 staff members were employed at its head offices in London and Marlow. The race is on to sell off the remaining stores, with the administrators keen to get it done before rent bills worth tens of millions of pounds are due.
While Deloitte previously promised there’d be no redundancies would be made to the work force at any of HMV’s 222 stores across the United Kingdom, with all outlets continuing to trade as normal while Deloitte continue to seek buyers, but desperate times call for desperate measures and “next stage of restructuring” – in the administrator’s words – led to the closure of more than 100 stores, along with nearly 1,500 jobs lost.
It’s been revealed, in a report by Insider Media, that the music giant owed £347m in debts when it filed for administration in January, including £237.1m owed to unsecured creditors which will likely go unpaid; that breaks down to £146.6m owed by HMV Music, £88.8 by HMV Group, £1.6m by Fopp and £23,000 by HMV(IP).
It’s possible that investments made by record companies and film studios will also be lost with about £40m in financial support provided to help save the retailer.
Universal Music, who owns rental stakes on many of HMV’s UK stores, led a scramble rescue effort for the ailing retailer following it entering into administration, leading record label majors such as Warner Music and Sony into a £40m (approx. $65 million) effort to ensure the ongoing survival of HMV as a supplier of their physical stock, against discount online retailers. It now looks likely that these investments will be lost.
The fallout since January has been a turbulent one with investors not the only one set to experience losses. Scores of HMV employees have already lost theirs jobs and thousands more are at risk with more than 4,000 people employed by HMV at the time of administration.
One angry rogue employee took to social media to voice their concern. Hijacking the company’s twitter account; they managed to get several bitterly sardonic posts up in a form of digital protest before they were discovered, and duly sacked, as one of nearly 190 jobs that were sacrificed at HMV’s head office and distribution services. One such sour tweet read: “There are over 60 of us being fired at once! Mass execution, of loyal employees who love the brand.”
With nearly a 100 years in the industry the closure of HMV’s UK stores marks a drastic shift in the music industry. The falling sales of physical music and the rise of digital have put HMV out of touch with the modern day consumer.
The Australian leg of HMV operations disappeared in 2005, purchased by rivals Sanity Music, with the final store, a Brisbane HMV outlet, closing in 2010, and by October 27th 2012, underlying net debts stood at £176 million (approx $AU 268m), with the company selling off its live entertainment business sector to stay afloat.
