HMV is bankrupt - again

[John F]

HMV, short for His Master's Voice - the retailer, not the record label - declared bankruptcy in 2012, came back in 2013, and now is going down again. They own 125 record stores, so it's easy to see why their business has been so bad.

HMV calls in administrators for second time in six years

Music retailer HMV confirmed it has called in KPMG as administrators. The move, the second in six years, involves 2,200 staff at 125 stores.

Owners Hilco, which took the company out of its first administration in 2013, blamed a "tsunami" of retail challenges, including business rate levels and the move to digital. It said the stores would continue to trade while negotiations were held with major suppliers and it looked for buyers.

Paul McGowan, executive chairman of HMV and its owner Hilco Capital, said: "Even an exceptionally well-run and much-loved business such as HMV cannot withstand the tsunami of challenges facing UK retailers over the last 12 months on top of such a dramatic change in consumer behaviour in the entertainment market." He pointed out HMV sold 31% of all physical music in the UK in 2018 and 23% of all DVD and Blu-ray, with its market share growing month by month throughout the year. But he added that the industry consensus is that the market will fall by another 17% during 2019 and therefore it would not be possible to continue to trade the business.

Holders of gift vouchers are being advised to consider spending them sooner rather than later. According to consumer publication Which?, whether vouchers and returns will be accepted following administration depends on the administrators. Their role is to "try and save the company", and in doing so, they "may take the decision not to accept returns".

Hilco's ownership saw HMV host live events in store, with musicians including Kylie Minogue, Stormzy and The Darkness.

Digital music revenue overtook sales of physical formats like CDs and records for the first time in 2012. Since then, online shopping, downloads and streaming provided by platforms such as Amazon, Spotify and Netflix, have continued to eat into sales of physical music.

Julie Palmer, partner at business consultancy Begbies Traynor, said the fall of HMV had been "coming for many years". She added: "It has been revealed that the business turnaround has been built on a bed of sand rather than rocks."

Analysis by Rory Cellan-Jones, BBC technology correspondent

With video and music still its main sources of revenue, HMV was always likely to be one of the retailers struggling to make it through the Christmas holidays. But this is about more than a struggle to adapt to changing consumer habits. HMV faced the same pressures of low consumer confidence, high rents and a lacklustre Christmas that have put other high street names in danger.

And don't be surprised if this is not the end of the story. The Entertainment Retailers Association points out that when you tot up music, video and games there is still a market of nearly £2bn worth of physical products. Big releases such as The Greatest Showman, Ed Sheeran and Adele have still attracted millions who want to own a physical copy. So maybe there is another turnaround specialist out there to keep the HMV name alive into its second century.

Weak retailing

Richard Lim, Chief Executive, Retail Economics, said HMV's situation came amid a weak retailing climate: "Poor Christmas trading has claimed its first victim." But the chief executive of the Entertainment Retailers Association, Kim Bayley, said there was hope: "What is clear is that following its first move into administration in 2013, HMV has enjoyed a remarkable turnaround and it is conceivable that this will happen again. "The fact is the physical entertainment market is still worth up to £2bn a year so there is plenty of business there."

While Christmas is normally a time of higher revenues for retailers, the number of shoppers hitting the post-Christmas sales dipped this year. Britain's shops have also faced uncertainty over Brexit, which sparked a fall in the pound and therefore raised the price of imported goods, as well as rising labour costs, higher business property taxes and unseasonably warm weather.

HMV, known for its iconic logo featuring the "dog and trumpet", is Britain's last surviving national music retailer. It was launched by English composer Edward Elgar in 1921, selling gramophones, radios and popular music hall recordings.

https://www.bbc.com/news/business-46699290

[John F]

HMV: The rise and fall of a music icon
By Jennifer Scott, BBC News

It was on 20 July 1921 that British composer Sir Edward Elgar opened the doors of a new shop at 363 Oxford Street, named "His Master's Voice". But the history of the brand that became known as HMV reaches back to the introduction of the gramophone in the 1890s. The inventor of the music player, Emile Berliner, got help from William Barry Owen and Trevor Williams to record and manufacture records for his devices, and the trio set up the Gramophone Company in 1898.

Once formed, the outfit focused on creating records and players in its factory in Hayes and distributing them to independent shops around the country. But to make them stand out, an iconic logo was needed. Owen bought a painting entitled "His Master's Voice" in 1899 from the artist Francis Barruad, featuring Nipper the Dog staring into an Edison cylinder phonograph. He asked the painter to substitute it with a gramophone and a year later the company had gained the rights to the picture and what was to become one of the most recognisable brands in music. It became their official trademark in 1909 and while the Gramophone Company was never officially called His Master's Voice Company, the famous pooch on the records meant it was how the public knew them.

As a result, it was a natural choice of name for their first store.The shop at 363 Oxford Street was destroyed by fire in 1937 and a temporary shop was set up on Bond Street until its reopening in 1939 - with the addition of an air-raid shelter for World War Two. Despite the horror of the war, music lived on, with patriotic songs becoming popular throughout the 1930s and 1940s. HMV also introduced listening posts so customers could come in and listen to records before they took them home - an initiative replicated across the industry.


Come the 1950s, the world was set to be shaken with a more positive force, as pop music exploded.More than 280 million singles were sold through the decade in the UK and HMV became a magnet for music lovers.These included as Cliff Richard, who cut a demo in the shop's studios and then secured a deal with the shop's parent company EMI, and Brian Epstein, who wanted to do the same for a then-unknown act, The Beatles.


By 1966, HMV began to expand, first in London and then through the rest of the country. In just six years, it doubled in size and became the UK's largest music retailer. The 1970s saw rivals come to bite at its heels.Our Price grew from its humble beginnings in London's Finchley Road, specialising in cassettes and eight tracks, to takeover as the country's second-biggest music seller after Woolworths, and Richard Branson opened his flagship Virgin Megastores a stone's throw from HMV on Oxford Street in 1976.


But come the 1980s, with the introduction of the compact disc and a 50,000ft flagship store opening in a new Oxford Street premises, HMV was back in the game. The chain was at the heart of the invention of in-store appearances by the biggest acts of the day. Paul McCartney, Michael Jackson, Madonna, David Bowie and Kate Bush were just some of the multi-million selling artists to grace its stores, signing CDs and playing exclusive sets for those who managed to squeeze in between the record racks.


The 1990s saw more growth in sales for HMV and more expansion as the rise of grunge and hip hop dominated the charts. The chain opened its 100th store in 1997 and McCartney returned to Oxford Street to re-launch its flagship, with more than 5,000 people turning up to watch. And as the DVD format rose in popularity, HMV jumped onboard, helping the company expand to more than 200 stores by 2004.

In the 2000s, more stars continued to flock to the shops to sell their wares, including Beyonce, Amy Winehouse and Lady Gaga. But along with new music, it was the decade that saw the launch of Apple's iPod, and the digital revolution had begun. After a raft of acquisitions by HMV, buying out smaller chains like Fopp and its rival Zavvi, as well as entering the live music business with Mean Fiddler, things took a turn.

The year after digital music revenues overtook sales of physical formats for the first time in 2012, HMV appointed Deloitte as company administrators and suspended shares. Loyal fans of the shops breathed a sigh of relief as Hilco, a firm that specialises in restructuring, took over the company and its 141 stores in a deal worth £50m.

HMV was to live another day, and despite closing its major store on Oxford Street, it returned to its original home at number 363 in October 2013, reinstating its retro signage and welcoming more acts, such as Stormzy and Kylie. But it was still being hit hard by the expansion of online shopping, the creation of streaming services and the cold hard fact that fewer people were buying physical formats.

Just days after the Christmas festivities of 2018, the retailer was poised to go into administration again - with more than 120 stores and 2,200 staff at risk. And there is no sign yet of another saviour for the legendary brand.

https://www.bbc.com/news/uk-46700080

[maestrob]

Fascinating, John, thank you! I had no idea that CD sales were still worth 2 billion pounds per annum. I guess that means that we're not alone among so many collectors. Nor did I know that HMV stores were founded by Elgar. Good for him!

[Lance]

Since the dawn of online buying, record stores have just about disappeared. Think Goody's, Tower, The Record Hunter, Sam the Record Man (Canada) and so many more, and now HMV stores. Whenever I went traveling anywhere in the world, I would always seek out record stores ... saw some wonderful ones in England, Germany and Switzerland, and of course, San Francisco, Boston, New York, Atlanta. Now as I travel, they are no longer around. Amazon and other onliners have changed the way we collectors buy books and recordings among many other things.

[John F]

Elgar didn't "found" the HMV record store, HMV did, but Elgar was one of their busiest and most celebrated artists, he liked making recordings, so when they asked him to take part in the opening ceremony, he agreed. He also took part in the dedication of their new recording studios at Abbey Road in 1931, and the event was captured on film - a newsreel, I guess:


https://www.youtube.com/watch?v=UrzApHZUUF0

[maestrob]

Looks like I misread the article, JohnF. Senior moment, then. Thanks for the film clip!

However, I found the article fascinating and sad news, anyway. We here in NYC had an HMV store on 72nd Street during the heyday of the CD in the 1980's & 90's, but I rarely shopped there, preferring the Tower Records store in Lincoln Center and also the one on lower Broadway in the East Village, where they had a special store dedicated to cutouts and discontinued items (CDs & LPs), right alongside their full price store.

I wonder what the percentage of sales of classical albums in CD format is these days? I see by the article that in the pop market it's 50/50 now, but I'll wager that classical CDs outsell digital formats still. Just a hunch.

[John F]

Potential HMV buyers given until Tuesday to make an offer
Richard Partington
13 Jan 2019

The future of the troubled HMV retail chain will be decided this week, with companies hoping to buy the long-established music retailer, which employs 2,200 people, set a deadline of Tuesday to submit bids.

HMV became one of the first casualties of the worst Christmas for 10 years on the UK high street late last month, when it called in administrators from accountancy firm KPMG to help it either find a buyer or wind up the company.

HMV – which accounts for nearly a third of all physical music sales in Britain as well as nearly a quarter of DVD sales – said retailers across the country had faced “a tsunami of challenges”, with “extremely weak” festive trading. Its 125 UK stores remain open while talks with suppliers and potential buyers continue. Several expressions of interest have already been made, according to Sky News.

The 97-year-old retailer, which also owns the nine-store Fopp music chain, was last rescued by Hilco, an investment firm that specialises in struggling companies, in 2013.

HMV’s troubles mirror the challenges facing entertainment retailers from consumers increasingly shopping online and switching to streaming services. At the same time, costs have risen for bricks-and-mortar stores.

A KPMG spokeswoman declined to comment.

https://www.theguardian.com/business/20 ... e-an-offer

[Lance]

Thank you, John F, for bringing us up-to-date on the HMV situation. I fear this is only the beginning of many brick and mortar stores disappearing. It is happening all around me. When and if Amazon is finally left to be about the last, watch their prices rise. I have already seen evidence of this. Many major stores from Macy's, Sears, Bon-Ton, Kids-R-Us and others have already shut down in my area. It hasn't helped to watch the population of the area drop to about half or less. This is happening throughout New York State. The only consolation is that one can order just about anything online without fighting trafffic, weather conditions, huge crowds, and in some cases avoid taxes - meaning we can sit around and have the stuff delivered and get fat(ter) with each passing day. Fortunately we still have restaurants around - can't do that by the web! - but now groceries can be delievered directly without going out. $50 or more and you don't even have to pay a delivery charge!

[John F]

Unfortunately it's not the beginning - record stores have been closing for years, with Tower Records the first domino to fall. One of several reasons I don't buy records any more is that most often the stimulus came from browsing the racks at Tower, HMV, and so on. In continental Europe and the far east I believe the situation may not be so dire, but I may be wrong.

[maestrob]

Thank you, John F, for bringing us up-to-date on the HMV situation. I fear this is only the beginning of many brick and mortar stores disappearing. It is happening all around me. When and if Amazon is finally left to be about the last, watch their prices rise. I have already seen evidence of this. Many major stores from Macy's, Sears, Bon-Ton, Kids-R-Us and others have already shut down in my area. It hasn't helped to watch the population of the area drop to about half or less. This is happening throughout New York State. The only consolation is that one can order just about anything online without fighting trafffic, weather conditions, huge crowds, and in some cases avoid taxes - meaning we can sit around and have the stuff delivered and get fat(ter) with each passing day. Fortunately we still have restaurants around - can't do that by the web! - but now groceries can be delievered directly without going out. $50 or more and you don't even have to pay a delivery charge!

Ironically, amazon is experimenting with automated stores, which operate without cashiers. The customer simply downloads an app to his/her phone, and technology scans the items you pick and put into your shopping cart. You get charged as you leave the store. Help yourself! No need to interact with a human.

My feeling is that this is illegal, because the store doesn't accept cash (which is supposed to be legal tender and accepted everywhere), which is how we shop for groceries. Their idea gives me the creeps and the heebie-jeebies, all at once!

[Lance]

Indeed, Brian. Good food for thought about the future. Amazon is very powerful now. They could possibly make things change! New York State imposed a tax on goods we buy even though they did not have an office or brick/mortar building within the state. They were losing so much tax revenue that steps had to be taken. Just imagine the taxes they would lose just from New York City alone! Of course that does not apply to third-party purchases but maybe that will change as well.

[Modernistfan]

Meanwhile, Gramophone has just reported that the sales of classical physical CDs, not downloads, not streaming, increased 6.9% in the United Kingdom in 2017, this despite the wavering of the British economy in the wake of the murky Brexit issue. (Undoubtedly, this does include some British-style Krossover Krap such as Alfie Boe, but there is no reason to presume that the proportion of Krossover Krap to real classical sales increased in 2017 as compared with prior years.) Unfortunately, HMV did not benefit from this. For one thing, their prices, at least when my wife and I were in London a few years ago, were extraordinarily high as compared with British mail-order sites such as Presto (and, when I order stuff from Presto or MDT from the United States, I do not have to pay the substantial value-added tax; knocking off the VAT just about pays for shipping to the United States on most orders). I walked out of HMV in London with no purchases.

[Lance]

Many people outside of the UK I know (including yours truly) buy many recordings from England on a regular basis, Amazon and MDT being the prime suppliers. No doubt the USA has assisted the UK in having higher numbers since the brick and mortar stores are disappearing in the USA and online buying has risen fast over the last few years. Prices (except shipping charges) tend to be lower, but overall costs are less.

Meanwhile, Gramophone has just reported that the sales of classical physical CDs, not downloads, not streaming, increased 6.9% in the United Kingdom in 2017, this despite the wavering of the British economy in the wake of the murky Brexit issue. (Undoubtedly, this does include some British-style Krossover Krap such as Alfie Boe, but there is no reason to presume that the proportion of Krossover Krap to real classical sales increased in 2017 as compared with prior years.) Unfortunately, HMV did not benefit from this. For one thing, their prices, at least when my wife and I were in London a few years ago, were extraordinarily high as compared with British mail-order sites such as Presto (and, when I order stuff from Presto or MDT from the United States, I do not have to pay the substantial value-added tax; knocking off the VAT just about pays for shipping to the United States on most orders). I walked out of HMV in London with no purchases.