As the UK music retail giant HMV undergoes further restructuring after entering administration in early January, after it was denied a £300 million (approx $AU 450m) loan from creditors to rescue it from its financial woes, administrators Deloitte have announced plans to close between 60 – 100 of the retail chain’s store with 1,500 jobs expected to be axed.
The news arrives only days after cuts to staff at HMV’s London offices prompted one fired staffer to hijack the company’s twitter, using the hashtag #hmvXFactorFiring to live tweet over 60 staff redundancies as they happened.
The rogue twitterer managed to get several bitterly sardonic posts up as part of a digital revolution before they were discovered, and duly sacked, as one of nearly 190 jobs that were sacrificed at HMV’s head office and distribution services. Joint administrators Deloitte issuing a statement that read: “Although such decisions are always difficult, it is a necessary step in restructuring the business to enhance the prospects of securing its future as a going concern.”
At the time, they’d noted that no redundancies would be made to the work force at any of HMV’s 239 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 The Telegraph now reports that administrators were preparing to take the “next stage of restructuring.”
Between 60 to 100 HMV stores are planned to get the chop, resulting in 1,500 unemployed staffers, and though the shops won’t close immediately – instead remaining open until their stock is exhausted. The restructuring plans, and specific store locations, are to be finalised by the end of the week.
Deloitte, along with Hilco – a US-based restructuring firm that agreed to buy out the 92-year-old music retailer’s considerable debt – have emphasised that for the company to emerge as a “viable high-street” concern, it needs to reduce its portfolio of stores, to roughly between 120 and 160 outlets from its 232 total.
One of HMV’s two flagship stores in London are also under threat as part of the restructuring, with The Telegraph pointing out that while the Oxford Street store (which first opened in 1921) is running at profit, the Piccadilly Circus outlet is running at a loss, and looks likely to get the chop.
Between 60 to 100 HMV stores are planned to get the chop, resulting in 1,500 unemployed staffers
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.
Record labels, music record companies, and film studios have all cut the price of CDs and DVDs supplied to HMV to help them in their current crisis, including letting them pay for consignment costs for stock – meaning they only pay for what they sell – as well as giving greater access to back catalogues.
The potential closure of HMV marks a drastic shift in the music industry, putting an end to a retailer with nearly 100 years history, and despite a healthy expansion of the company in the 1990s, branching into books, live music venues, festival promotions, and overseas chains (such as Australia), the drop in physical sales with digital overtaking music consumers’ tastes has seen some disastrous outcomes for the company.
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.
The retailer had hoped that they usually booming Christmas retail period would provide a last minute saviour, but when economic conditions proved too tough for another holiday spending spree for consumers, HMV instead went the opposite direction with a month-long sale that saw shares in the company sinking to an all-time low, valuing the company at a measly £5 million (approx $AU 7.6 m) at its nadir.