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HMV calls in administrators – UPDATE: “We still believe there is a future”

Monday, 14th January 2013 21:23 GMT By Brenna Hillier

HMV will enter administration tomorrow, potentially signalling the end for the nearly century-old high street chain.

Update:

A spokesperson for HMV has told Eurogamer that the retailer does not view its decision to call in the administrators as the end of its life in the entertainment retail business.

“We don’t see this as a final chapter; we still believe there is a future,” said spokesperson Gennaro Castaldo. “It might have to be a slightly different future, but one we can still try to achieve, so we’re working hard to make that happen.”

Castaldo confirmed that communication with the retailer’s 4350-strong work force had been undertaken in order to keep them informed of events. No HMV stores will close prior to the administrator taking the reins.

The retailer is currently unable to accept gift vouchers for payment, which Castaldo referred to as “a fairly standard thing in retail administration situations”. He added that “there’s usually a procedure that allows them [you] to make an application to the administrator”. “And if there were to be a buyer in due course there might be further communication about it as well.”

Deloitte is poised to assume the role of administrator of HMV at some point today.

Original story

Earlier today, the Guardian reported that HMV’s board members had called on Deloitte to administer the chain. HMV has since confirmed the news in a statement:

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.

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.

Deloitte was also responsible for overseeing Comet’s demise in December, which resulted in a total shut down with all jobs cut.

UK media including the Telegraph and Channel 4 suggest administration will begin on Tuesday morning.

HMV had made a last effort to avoid bankruptcy in requesting £300 million in credit from its suppliers, following on from £40 million pledge last month. The chain was valued at just £14 million, and publishers and labels declined the second, heftier request.

US private-equity firm Apollo Global Management had been earmarked as a potential saviour, but the Independent now cites an anonymous source for word that the company has no plan to increase its 6% stake in HMV;s debts.

The HMV Group has operations in the UK, Hong Kong and Singapore, and employs between 4,000 and 4,500 staff at its 235 stores and offices.

In operation since 1921, HMV is responsible for 27% of all DVDs and Blu-Ray discs and 38% of the physical music market in the UK.

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20 Comments

  1. AHA-Lambda

    Yeah just saw this on gaf, sad day

    #1 2 years ago
  2. Beta

    I’ll miss my local HMV. Always popped in there when I went to town and I worked there for a while. Thoughts are with the workers.

    There’ll be no high street chains left soon, except for the tax dodgers obviously :P

    #2 2 years ago
  3. psxman

    No more spontaneous purchases on an idle Saturday…

    #3 2 years ago
  4. Fin

    HMV can fuck off, I was in there before Christmas, they had Black Ops 2 new for like £43, a preowned copy beside it for £40.
    Fuck off retail!

    #4 2 years ago
  5. AHA-Lambda

    @4 – you could say that about any shop that sells games though =/

    #5 2 years ago
  6. Fin

    @5

    Yup, which is why I’ve no issue with highstreet retailers going out of business. CEX I’m fine with, but the rest, fuck ‘em.

    #6 2 years ago
  7. SpinachPuffs

    @4: For Black Ops 2, that’s not so much HMV’s fault as Activision’s: check the prices on Steam, Amazon, GAME… they’re all around £40.

    But you’re right – HMV was pretty terrible for charging full RRP on almost everything at launch, even when online retailers were undercutting them by about 50%. I remember pre-ordering a double Blu-Ray box set of the Fantasia films for £15 on Amazon, and then seeing them in HMV on release day for £28. It’s not much of a surprise that this is happening, but I’m still sad to see them go.

    #7 2 years ago
  8. MadFlavour

    Bummer for all the staff affected. But I don’t think I’ll miss them much. Probably still about a hundred percent more than I will miss GAME when they finally give in to the inevitable.

    R.I.P retail.

    #8 2 years ago
  9. Fin

    @7

    Nah man, it’s not that the retail copy was expensive (it was), it was them selling a preowned copy on the same shelf, for just £3 cheaper.

    #9 2 years ago
  10. BraveArse

    Its bad news for everyone, whether you like them or not. With Play resorting to being an eBay style marketplace, and now this, Amazon will be popping the champagne corks and planning their price hikes.

    Notwithstanding the fact that 4000 poor fuckers are going to lose their jobs.

    #10 2 years ago
  11. Kabby

    Loved HMV before they kicked PC into touch, whacked up prices and used 50% of their floor space for useless electronic devices.

    #11 2 years ago
  12. Lewis247

    They are over price on everything. So out of touch with what customers want and expect. It was obvious this would happen.

    #12 2 years ago
  13. Lounds

    Tesco sells more CD’s and DVD’s fact.

    #13 2 years ago
  14. monkeygourmet

    @9

    You have to remember, everyone’s trying to get a bit of the ‘second hand pie’ before it ceases to exist.

    Look at how many retailers have suddenly started trading in or selling second Hand games (UK):

    Asda, Argos, Blockbuster, Tesco, Sainsburies… It’s a get it before its gone mentality.

    #14 2 years ago
  15. NeoSquall

    I’ll always be grateful to HMV for being the only UK retailer willing to ship the PC Collector Editions of Warhammer 40.000 Space Marine and Batman: Arkham Asylum and the Warhammer 40.000: Dawn of War II Special Edition to Italy, where it wasn’t available at all.

    #15 2 years ago
  16. Telepathic.Geometry

    I always felt that the second hand games gouging was the product of a genuinely desperate need for revenue. I guess the high street store has become an obsolete business model. The margins on new games sales MUST have been way small…

    #16 2 years ago
  17. Gheritt White

    Just picked up Singularity for a fiver in their 25% off second-hand games blue cross sale. Thanks HMV!

    #17 2 years ago
  18. DSB

    It’s only going one way for these kinds of shops. I’m not sure how much of it is the industry and how much is the shops though, but selling music stopped being as simple as stocking music a long time ago.

    Music has failed to qualify itself as a value that is worth any real money, so the only way you’re going to get people to buy it is if you can either make it dirt cheap and convenient, or turn it into an experience, which I think a lot of the real music junkies still really want.

    I’d give a hand to visit a place like The Record Vault in San Fransisco if it was still around.

    The record stores that still do well are the ones that care about making it an experience, and I reckon that takes a sensibility and a passion that you just can’t cram into a franchise chain.

    Whether you order from a mailorder, or you go to a shop, you’re still getting the same record in your hands, so that shop really needs to be worth the trip.

    #18 2 years ago
  19. GrimRita

    Funny how the same idiot that help guide Jessops down the river is now CEO of HMV.

    One man, no vision. Its that simple. HMV were always quick to blame the pirates when digital arrived they didn’t think it would take off – with such a strong brand name, they SHOULD have invested in digital some 10-15 years ago.

    If they showed any creativity, they could have survived. With such a vast store base, they could offer something most online retailers cant – SAME day delivery. Much like when ordering a pizza, chap could order online and have item delivered to their place of work, or home.

    Offering a service like this will be the only way retail can survive.

    #19 2 years ago
  20. SplatteredHouse

    On the one hand, the head of PR says they think their business has a future – then, shortly after: http://hmv.com/hmv/site_down_1a.jpg “until further notice”. Was the online store simply costing them money, and not profitable, or could there be more to it?

    #20 2 years ago

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