Day the music died
2,000 jobs at risk as HMV fails for a second time in six years
MUSIC giant HMV is on the brink of collapse for the second time in six years, putting 2,000 jobs at risk.
Bosses blamed a “tsunami of challenges” after yesterday confirming they had called in administrators.
The firm, with 125 shops, has been hammered by online streaming services such as Amazon, Apple and Netflix.
Nationally, demand for DVDs in the Christmas run-up crashed 30%.
HMV also cited hefty costs, including £15million a year business rates.
Last night administrators KPMG said the firm had gone into administration.
In January 2013 the company was saved by restructuring firm Hilco Capital which this year rescued Homebase.
Paul McGowan, executive chairman of HMV and Hilco, said: “Even an exceptionally well-run and much-loved business such as HMV cannot withstand the tsunami of challenges facing retailers over the last 12 months on top of such a dramatic change in consumer behaviour in the entertainment market.”
HMV’s problems come despite it selling 31% of all physical music in the UK in 2018 and 23% of all DVD and Blu-ray, with its market share growing throughout the year.
Its expected demise threatens shockwaves for suppliers.
The chain, founded in 1921, says it paid £1.3billion to UK music labels and movie studios in the last six years.
Last night shopping experts urged anyone given an HMV gift card for Christmas to spend it today.
HMV’s woes cap one of the worst years in living memory for the high street, with an esti- mated 150,000 jobs lost. The Mirror has spearheaded demands to turn things around through our High Street Fightback campaign. There are fears for a number of other retailers, including Debenhams.
It is due to reveal its Christmas sales figures on January 10, the same day as struggling Mothercare, Marks & Spencer and Card Factory. Others set to announce results next month include Moss Bros, Dixons Carphone, Carpetright and Game Digital. High street stores – battling online shopping, higher costs and low consumer confidence over Brexit – have been slashing prices after brutal trading in November and early December failed to lure shoppers. HMV lost another £8.8million last year as sales fell nearly 8% to £277million.
Its £15million rates bill compares with the estimated £38million Amazon pays on warehouses and other properties in England and Wales. However, Amazon’s sales in the UK soared by a quarter to £8.8billion last year.
Both Amazon and Apple have been criticised over their tax affairs while Netflix recently confirmed its UK accounts were “under examination” by HMRC.
Richard Lim, of industry experts Retail Economics, spoke of a “perfect storm” of distress for retailers. He added: “While it is too early to assess the relative success of Christmas trading, it’s clear consumer confidence is fragile and shoppers’ propensity to spend is weak.”