HMV in spin to save company
Jan 15, 2013 / 6:54 am
British music and entertainment retailer HMV admitted defeat on Tuesday after more than 90 years in business, suspending trading in its shares and calling in administrators to try to salvage any viable parts of the business.
HMV is the last big retail chain selling recorded music in Britain and employs more than 4,000 people working in 238 stores, which will remain open for the time being.
The announcement follows a strong Christmas-New Year sales season for HMV-branded stores in Canada, which are under separate ownership.
The Canadian stores reported last week that their $65.4 million of sales over the holiday period brought the 12-month total to more than $270 million.
The British company's management confirmed Tuesday that it had failed to gain agreements with lenders and suppliers to continue trading. It has appointed three partners of Deloitte LLP to administer the business.
The name HMV stands for "his master's voice," from the company's trademark of a dog named Nipper staring intently at the bell of an early gramophone player. The first HMV music store was opened in London in 1921.
The company opened a store in Canada in the late 1980s, and later moved into the United States, Japan, Australia, Hong Kong and Singapore.
The Canadian operation downsized to 113 stores but appeared to be adjusting to changed market conditions more rapidly than other parts of the international group. The Canadian HMV stores were sold last summer.
"HMV's notice of administration was inevitable with online retailers, downloads and supermarkets combining to marginalize a brand which has become out-priced and outdated, despite its strong heritage," said Julie Palmer, partner at recovery and restructuring specialist Begbies Traynor.
HMV suffers from the high costs of running too many shops in high-rent city centres, while competitors selling online have lower overheads.
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