The crumbling of the Allans Billy Hyde music retail empire last year, sinking amongst debts of nearly $40 million with hundreds of job at risk, before rival retailer Gallin’s Musician’s Pro Shop retail stores swooped in at the eleventh hour and purchased the company and its assets.
The whole saga was a powerful sign of the times, and now one of Britain’s longest running music retail chains has announced its going into administration, marking the end of an era and sending a message about the state of the music industry.
HMV is going into administration with the UK music retail giant owing millions in debt to suppliers and investors. As The Music Network reports, HMV issued a statement to Music Week that discloses “The company’s ordinary shares will be suspended from trading on the London Stock Exchange with immediate effect,” with nearly 4,000 jobs now at risk after being HMV was denied a £300 million (approx $AU 4.5m) loan from a consortium of suppliers and struggling with the steady decline in music, DVD and videogames sales.
Reuters reports that accounting firm Deloitte has been named as the administrator and plans to keep the 239 HMV stores across the UK and Ireland operational until it seeks a potential buyer.
The warning signs first came in December, when HMV Group warned that a breach of its banking terms was imminent, organising talks to remedy the situation, according to a statement issued this week.
“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,” reads the statement from the retailer. The combination of Britain’s recent economic downturn, as well as flagging physical sales has affected other established British retail brands, such as newsagency WH Smith and online retailer Zavvi. “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.” – HMV statement
The blow to HMV however, sees the curtain drawing on a company with a rich history that dates back to the 1890s, with the turn of the century marking the development of the Gramophone Company, while selling records through the His Master’s Voice label, featuring the iconic image of ‘Nipper the dog’ peering into a gramophone.
The first HMV retail store opened on London’s Oxford Street in 1921, and by the 60s the company had shifted its focus to the retail sector. The 1990s saw a major expansion of the company, with HMV branching into books, live music venues and festival promotions, and of course, overseas chains.
As The Music Network points out, the Australian leg of HMV operations was purchased by rivals Sanity Music in 2005, with most stores being converted to Sanity retailers or closing down entirely, with the last of its kind, a Brisbane HMV outlet, closing in 2010.
While Australians may have gotten used to HMV (and many other music and media outlets) drying up, the chain’s disappearance from the British market marks a major turning point in the music industry landscape.
Supply from record labels, games manufacturers, and entertainment producers was crucial to HMV’s survival, but by October 27th 2012, underlying net debts stood at £176 million (approx $AU 268m), with the company selling of 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.
