HMV....back into administration

[Gnomicide]

Read this the other day, snaffled from The Times I believe.

Quote

The vulture fund that owns HMV took almost £50m in fees out of the struggling music retailer during its five-year ownership, while HMV paid no corporation tax.

The DVD and vinyl chain confirmed on Friday that it had called in administrators from the accountancy giant KPMG, leaving 2,200 staff facing the loss of their jobs and 125 stores at risk of closure. The cost of any statutory redundancy payments will be borne by taxpayers.

Paul McGowan of Hilco Capital, HMV’s owner since 2013, blamed a “tsunami” of retail challenges. These included a 30% collapse in the DVD market over Christmas due to video streaming and, he said, a business rates bill that had cost HMV £15m a year.

However, Companies House accounts for HMV Retail, the main trading company, show that Hilco has taken up to £48m out of HMV since 2013 through payments to related companies such as Hilco Profit Recovery, Hilco Property, HMV (Brands), Retail Consultancy and Retail Procurement Services.

Hilco said that the accounts showed the amounts due, not the amounts paid, and that HMV had paid no fees in the past two years. It added: “Hilco has expended considerable efforts in ensuring the continuance of HMV as a business, including the provision of all retail and property advisory services at rates either in line with or below the market levels.”

HMV made a pre-tax loss in every year of Hilco’s ownership, meaning it paid no corporation tax, although it was always profitable at an underlying level — before costs, such as Hilco’s fees, were deducted.

Labour MP Clive Betts, who is leading a parliamentary inquiry into the crisis on the high street, said it was “outrageous” that Hilco had taken millions from HMV while “seeking to blame everything else, including business rates”. He added: “It’s another example of the government picking up the tab while others make an awful lot of money. These retail companies are ripe for unscrupulous people to come and make as much money as they can from and then cast them off, leaving a lot of employees without jobs.”

The MP said he would raise the issue of HMV with Jake Berry, the high streets minister, who is due to give evidence to Betts’s inquiry next month.

Hilco said it paid taxes “in full and in accordance with all local tax legislation and reliefs”. It said it had extended more than £56.6m in loans to HMV for working capital. It added: “When taken together with an additional £4.5m loaned to the company in the past few months, Hilco companies represent the largest creditors of HMV Retail and are highly unlikely to recover those amounts in full.”
HMV’s collapse follows what the Sports Direct billionaire Mike Ashley called the worst November on record for retail and nightmarish Christmas trading. Early indications suggest the Boxing Day sales brought little relief, with footfall down for the third year in a row, by 3.1%, according to the data provider Springboard.

HMV’s collapse follows what the Sports Direct billionaire Mike Ashley called the worst November on record for retail and nightmarish Christmas trading. Early indications suggest the Boxing Day sales brought little relief, with footfall down for the third year in a row, by 3.1%, according to the data provider Springboard.

The FTSE 100 bellwether Next is expected to set a grim tone when it reports on Thursday. Analysts at investment bank Jefferies expect the mid-market fashion retailer, run by Lord Wolfson, to cut its full-year profit forecast by 3% to about £705m. Jefferies forecasts a 13.5% drop in like-for-like store sales based on the “tough backdrop”. Shares in Next have fallen by almost a fifth since the start of the month, to close on Friday at £40.48.

HMV, named after His Master’s Voice, the Francis Barraud painting of Nipper the dog, traces its roots back to the Gramophone Company, founded in 1897. It went bust for the first time in January 2013, having missed the digital music revolution. It sold its books business, Waterstones, to the Russian billionaire Alexander Mamut before going under.

McGowan, who trained as an accountant and became a close ally of the discredited dealmaker Sir Philip Green, masterminded the purchase of the core HMV business. Hilco had previously made huge amounts swooping on struggling retailers and liquidating them, as it did with department store chain Allders, which it took over with Green’s backing in a raid that cut the pension fund loose.

Under Hilco’s ownership, HMV’s sales rose from £311.3m in 2013 to £365.8m in 2014, before falling back to £325.4m, £300.8m and then £277.2m last year. HMV made underlying earnings of more than £60m over the period but recorded pre-tax losses of almost £40m.

Companies controlled by Hilco charged HMV fees of £10.1m in 2013, £11.9m in 2014, £10.3m in 2015, £8.9m in 2016 and £7m last year.
Hilco said that as well as giving HMV Retail a holiday from fees over the past two years, it had allowed it to not pay interest on a loan of more than £8m, and to pause repayments for the past year.

 

[jump]

HMV have been bought by some Canadian retailer called Sunrise Records. However 27 shops are gonna close with about 450 people being laid off. 

[eFestivals]

8 minutes ago, jump said:

HMV have been bought by some Canadian retailer called Sunrise Records. However 27 shops are gonna close with about 450 people being laid off. 

Sunrise bought the Canadian HMV stores last time HMV went tits up.

So this sounds like a good outcome even tho some stores will close, as presumably they think they know the right way to run a record shop in today's world.

[The Nal]

They can keep closing and re-opening as much as they like but its never going to work. I can get a new album on Friday at 9.00am on streaming service why would I go into town to pay 15 quid for a CD? Its an obsolete business model. Its like opening up a Betamax shop. 

[eFestivals]

4 minutes ago, The Nal said:

They can keep closing and re-opening as much as they like but its never going to work. I can get a new album on Friday at 9.00am on streaming service why would I go into town to pay 15 quid for a CD? Its an obsolete business model. Its like opening up a Betamax shop. 

vinyl, for a start. I think HMV outsold Amazon for that last year.

But who knows what their plan is, anyway? I'm just presuming they've got one as they're an expanding player in what is a shrinking market.

Far better than Mike Ashley buying HMV, that's for sure.

Edited February 5, 2019 by eFestivals

[The Nal]

3 minutes ago, eFestivals said:

vinyl, for a start. I think HMV outsold Amazon for that last year.

But who knows what their plan is, anyway? I'm just presuming they've got one as they're an expanding player in what is a shrinking market.

Far better than Mike Ashley buying HMV, that's for sure.

Oh sure, but they don't need a premises the size of a warehouse to do that. A lot of the stores I've been in, Ireland and UK, are just too big. 

[jump]

I'm always surprised they don't do more with video games, they are normally in the smallest section (even the band shirt aisle is bigger) but it's generally a medium that has a stronger physical presence than DVDs or CDs.

[Dan R]

There's loads they could be expanding into like vinyl, video games, merchandise, collectibles, and hardware. The new smaller store in Liverpool sells all those on the ground floor and is reasonably busy whenever I go in, the upstairs with the CD's and DVD's are always almost empty. They're expected to be announcing the 27 unprofitable stores to shut later today so I guess that'll give a clearer picture of what they expect to make profit on.

48 minutes ago, jump said:

I'm always surprised they don't do more with video games, they are normally in the smallest section (even the band shirt aisle is bigger) but it's generally a medium that has a stronger physical presence than DVDs or CDs.

I'd guess they don't want to invest too heavily in a sector which seems to be more and more focused on downloads. Still seems crazy how limited their selections normally are though.

[TheGayTent]

Why are they still called video games? 

[eFestivals]

2 minutes ago, TheGayTent said:

Why are they still called video games? 

because they're not ball games or board games?  

[A-Rob]

 

2 hours ago, The Nal said:

They can keep closing and re-opening as much as they like but its never going to work. I can get a new album on Friday at 9.00am on streaming service why would I go into town to pay 15 quid for a CD? Its an obsolete business model. Its like opening up a Betamax shop. 

I think there's still place for record shops, but like others said they have to be more focused on Vinlys, games, bands merch & memorabilia and less cds & dvds. 

 

 

[clarkete]

2 hours ago, The Nal said:

They can keep closing and re-opening as much as they like but its never going to work. I can get a new album on Friday at 9.00am on streaming service why would I go into town to pay 15 quid for a CD? Its an obsolete business model. Its like opening up a Betamax shop. 

http://spillmagazine.com/spill-feature-the-fun-of-going-to-a-record-store-is-the-treasure-hunt-a-discussion-with-sunrise-records-doug-putman/

[The Nal]

10 minutes ago, clarkete said:

http://spillmagazine.com/spill-feature-the-fun-of-going-to-a-record-store-is-the-treasure-hunt-a-discussion-with-sunrise-records-doug-putman/

I love shopping for vinyl. Mainly at record fairs. But CDs and DVDs are dead. That was 90% of their product. 

22 minutes ago, A-Rob said:

I think there's still place for record shops, but like others said they have to be more focused on Vinlys, games, bands merch & memorabilia and less cds & dvds. 

Agree yeah. I'd hate to see them go away forever. 

I don't have any sympathy for market leading businesses that dropped a bollock when the trends were so clearly changing. See also Nokia etc. No reason why HMV or Tower or Virgin couldn't have been the new Spotify. To be taken over so quickly like that by start ups is really poor. 

Edited February 5, 2019 by The Nal

[eFestivals]

here's the list of closing stores...

Ayr
Bath
Bluewater
Bristol Cribbs
Chichester
Exeter Princesshay
Fopp Bristol
Fopp Glasgow Byres
Fopp Manchester
Fopp Oxford
Glasgow Braehead
Guernsey
Hereford
Manchester Trafford
Merry Hill
Oxford Street
Peterborough Queensgate
Plymouth Drake Circus
Reading
Sheffield Meadowhall
Southport
Thurrock
Tunbridge Wells
Uxbridge
Watford
Westfield London
Wimbledon

[jump]

Fuck sake, Wimbledon and Oxford Street are the two I go to. I thought Wimbledon might be safe as it part of it's a cinema. At least London Fopp is safe for now.

[kaosmark2]

39 minutes ago, eFestivals said:

here's the list of closing stores...

Bristol Cribbs
Fopp Bristol

Can't say I'm going to miss them. I've spent more in Rough Trade in the last 2 months than in HMV + Fopp in the past 2 years.

[clarkete]

5 hours ago, A-Rob said:

 

I think there's still place for record shops, but like others said they have to be more focused on Vinlys, games, bands merch & memorabilia and less cds & dvds. 

 

 

Grew by 1000 percent apparently in 2017 "Under the direction of president Doug Putnam Sunrise placed their bets on vinyl making it the focus of their record stores. As well as moving the focus to vinyl records Sunrise Records have been enhancing the experience of their music stores with vintage items for sale and merchandise, creating a gallery of music goodies."

http://routenote.com/blog/small-canadian-record-store-grew-almost-1000-1-year/

[Andre91]

Ecstatic that it has been saved. Also ecstatic that both Lincoln and Doncaster stores are staying so both of my bases are covered  

[Mouseboy11]

17 hours ago, kaosmark2 said:

Can't say I'm going to miss them. I've spent more in Rough Trade in the last 2 months than in HMV + Fopp in the past 2 years.

Same here, love Rough Trade. I do wish they'd do some discounting sometimes.

[Chef]

20 hours ago, jump said:

Fuck sake, Wimbledon and Oxford Street are the two I go to. I thought Wimbledon might be safe as it part of it's a cinema. At least London Fopp is safe for now.

Same here - that is really annoying. Does that mean Fopp will be the only London branch? 

Thought maybe Oxford Street would stay being the original one and all that

[jump]

25 minutes ago, Chef said:

Same here - that is really annoying. Does that mean Fopp will be the only London branch? 

Thought maybe Oxford Street would stay being the original one and all that

The next nearest ones are Kingston and Bromley which are sortof London.

The rents in central London are joke so I'm not surprised if it's making a loss. I've worked for retail and restaurants companies before and I've seen how sky high it is first hand. The funny thing is inbetween a shop closing and finding a new long term tenant they will allow one of those crappy tourist sellers (the kind that sell cushions of The Queen, Union Jack shirts etc) to set up in it for the time being and they pay nowhere near as much as the like of Maccie Ds and HMV do.

Edited February 6, 2019 by jump