Firstly sorry Mods if this is in the wrong place but due to the massive impact HMV closing could have on the overall market i thought the music area of the forum was the best place for it.

 

HMV, which has 238 UK shops, used its interim results to warn there is “material uncertainty” about its future, with pre-Christmas trading below expectations and like-for-like sales down 10.2pc in the 26 weeks to October 27.

 

The high street retailer is under fierce pressure as sales of CDs, DVDs and games transfer to the internet and it tries to manage £220m of bank debt. The company has already raised by cash by selling book chain Waterstones for £53m and the Hammersmith Apollo for £32m.

 

However, Trevor Moore, who arrived as chief executive in September, is fighting to turnaround the business and is hoping to agree a deal with the syndicate of eight banks that holds HMV’s debt.

“We have good dialogue with suppliers, and good and constructive discussions with the banks, who are aware of the situation we are in,” he said.

 

Mr Moore was hired by HMV after nursing photographic retailer Jessops back to health. “We (HMV’s management) are as well placed as anyone to embrace the challenge,” he said. “We are further ahead in our thinking than at Jessops.

 

"I am here for a reason, nothing has happened in the last three months to make me think any different to when I got here.”

It is understood that music and film studios have provided about £40m of financial support to HMV because they want the retailer to survive on the high street.

 

Although Mr Moore declined to comment on the nature of supplier relationships, he said that HMV had worked with suppliers to offer discounts such as “5 for £30” on Blu-Ray discs.

 

However, the company still posted a £36m loss in the half-year, following a £50m pre-tax loss in the period last year.

This means that HMV expects to breach covenants in January. HMV should meet a £30m amortisation payment and pay down £50m of a working capital facility for 31 consecutive days.

 

However, it will fail covenant measurements on fixed charge cover and net debt to earnings before interest, taxes, depreciation, and amortisation.

 

The end of HMV seems to have been on the cards for years and now with all the assets stripped out of the company [Waterstones & HMV Live offloaded] there is little room to generate big money from the sale of assets, If the media reports are to be believed the entertainment industry is heavily supporting/subsidising HMV through the Christmas period.

 

If HMV ends i think the market will change beyond recognition until it somehow stabilizes - Whatever people's thoughts on the role of HMV in the High Street from working there i know a large chunk of the market would be excluded from buying music - Although the likes of Tesco and Asda have all the latest new releases stacked to the ceiling they have little interest in stocking back catalogue titles which sell in small volumes, Many of the people that shop in HMV do not download music and have no internet access - Today alone i have been asked for and sold back catalogue titles by the likes of Pink Floyd, Two Door Cinema Club, Funeral For A Friend, Bee Gees, Paramore, David Bowie, The Eagles etc, - Titles which are not available anywhere else apart from the internet and sales which would be lost without HMV.

 

In its current form clearly HMV cant survive but it would be tragic of the brand was lost for good on the High Street and im hoping for some kind of takeover bid as the entertainment industry as a whole seem keen to keep the brand going as they realise it is the final outlet to sell their product from apart from new titles.

 

Thoughts?

 

On a seperate note can you imagine if HMV did collapse in the new year - Considering most stores hold 200+ copies of big titles like Rihanna, Little Mix, Eva Cassidy, Andre Rieu, Alfie Boe, Bruno Mars etc, the impact on the charts would be huge especially for all the older titles kicking around and we could have a repeat of Alexandra Burke/Woolworths closing down sale for James Arthur but i really hope that it does not come to that!

Edited January 16, 201312 yr by ___∆___

I bet album downloads would increase massively. I mean, what other store sells music and games etc.?

Thanks for posting this, we've had articles in the past regarding HMV in the chart forum, so this is the right place for it.

 

I've heard a lot about this, there was an article on MW as well, its sad to see another music store going, the future does not look that good for HMV, but they have been in trouble for a few years now, I don't know how this will effect album sales in the long run. As supermarkets limit the chart to a top 40 only and back catalogues will only be availabe on the net, places like Amazon.

I think part of the blame for this is the government with it's 20% VAT, cutting incomes and well bleeding the people dry.

 

If people haven't got it, they won't buy it. Osborne is killing the high street off,

I don't know what "amortisation payment" means but it doesn't sound very nice.

 

HMV is doomed now I fear. I don't see how they will be able to reverse the continuous decline. It's just not sustainable as a business now. Even if it lasts a few more years, the sales of physical media are never going to start going back up so there doesn't seem to be very much they can do about it.

I bet album downloads would increase massively. I mean, what other store sells music and games etc.?

 

I think initially there would be little change as the market would totally need to adapt - Believe it or not a huge % of HMV customers do not have internet access and have no idea what an MP3 is let alone how to download one and are still quite happy to pay £12+ for a back catalogue album title, These people would need to adapt and either get into ordering online or downloading which would take time.

 

Also a huge amount of 'impulse sales' would be lost - Many people go into HMV to browse and end up buying 4 CDs in the '2 for £10' offer and it would be hard to replace the impulse purchases online.

 

HMV debt grows to £176.1m in H1; sales down 13.5% but losses narrow

Source: MW

by Tim Ingham

HMV's total sales were down 13.5% to £277.6 in the six months to October 27 this year (2011: £333.7m).

 

The retail group has admitted in a new interim trading statement that it will be forced into a "probable" covenant breach of its banking at the end of January 2013

 

It said: "Current market trading conditions result in material uncertainties facing HMV... Constructive discussions with the Group's banks including keeping them fully informed in relation to current trading."

 

Like for like sales (from continuing operations) were down 10.2% (2011: down 11.9%) in the period, but total Group loss after tax and exceptional items reduced to £36.1m (2011: loss of £50.1m)

 

Net cash outflows from operating activities stood at £33.5m (2011: outflow of £28.4m), whilst underlying net debt grew to £176.1m (2011: £163.7m).

 

The business said it grew its market share of music in the period, as "suppliers continued to provide strong support".

 

It blamed a "disappointing release schedule in summer 2012" for impacting sales but added that the like-for-like trend improved in the second quarter.

 

Chief Executive Trevor Moore said: "HMV has had a difficult first half. However, the business has started to deliver a number of new initiatives which will help to maximise the seasonal sales opportunity and provide a platform for growth in 2013.

 

"Additionally, as we trade through this period we will continue to develop further initiatives with our suppliers and I will provide updates at the appropriate time."

 

======

 

I found the offending report from MW just in case anyone wanted to read up

I think part of the blame for this is the government with it's 20% VAT, cutting incomes and well bleeding the people dry.

 

If people haven't got it, they won't buy it. Osborne is killing the high street off,

is there anything you don't blame the Government for? :D

 

Anyhoo, the sad fact is that the high street can't compete with online stores, and as has been noted before downloading of albums will increase (exactly the same as happened with singles). Overheads and staffing costs will obviosuly hit the high street more than the likes of Amazon and Play.com who will continue to sell CD's as long as the demand is there, for everything else there is i-tunes etc. More bands will have to put their back catalogue online to generate any cash at all from it (see AC/DC recently). HMV have done well to survive as long as they have.

I don't know what "amortisation payment" means but it doesn't sound very nice.

 

It basically means HMV should be paying off loans over a set period of time - Woolworths were in the same position and defaulted on payments which brought them to an end.

I think initially there would be little change as the market would totally need to adapt - Believe it or not a huge % of HMV customers do not have internet access and have no idea what an MP3 is let alone how to download one and are still quite happy to pay £12+ for a back catalogue album title, These people would need to adapt and either get into ordering online or downloading which would take time.

 

You seem to be working in a music store, what age gap are we talking about here, it would show the breakdown of the buyer, as most kids and teenagers are bound to have access to computers in some form.

You seem to be working in a music store, what age gap are we talking about here, it would show the breakdown of the buyer, as most kids and teenagers are bound to have access to computers in some form.

 

It's the 50+ age group - Day in and day out they still come in asking for CD singles and still can quite grasp why a #1 single is not available as a CD single [i was asked for 'Diamonds', 'Troublemaker' and 'Locked Out Of Heaven' today - I'm sure they think im lying when i say there is no CD single available :lol: ].

 

When someone asks for a CD that we don't stock i often tell them to order it from HMV online and they tell me that they don't have access etc, and are happy to order it in store [Which for old titles can take several weeks to arrive] and pay £15.

Another potential victim of the tax dodgers of Amazon :angry:

I think part of the blame for this is the government with it's 20% VAT, cutting incomes and well bleeding the people dry.

 

If people haven't got it, they won't buy it. Osborne is killing the high street off,

Much as I hate to defend Osborne the problem goes back further than that. For many years online retailers (including HMV online) were able to avoid VAT by basing their operation in the Channel Islands. Osborne ended that loophole. If it had been closed a decade or more ago that would have narrowed the gap between the prices charged online and the High Street price thus making High Street retailers more competitive.

It's the 50+ age group - Day in and day out they still come in asking for CD singles and still can quite grasp why a #1 single is not available as a CD single [i was asked for 'Diamonds', 'Troublemaker' and 'Locked Out Of Heaven' today - I'm sure they think im lying when i say there is no CD single available :lol: ].

 

When someone asks for a CD that we don't stock i often tell them to order it from HMV online and they tell me that they don't have access etc, and are happy to order it in store [Which for old titles can take several weeks to arrive] and pay £15.

 

It's a shame HMV can't just introduce some type of CD single making booth. Select the CD (ie; 'Diamonds' tracklist would be that of the EP on iTunes). Insert blank CD, wait a few minutes for tracks to be burned onto blank CD. Meanwhile, artwork is printed off and et voila a CD single of 'Diamonds', 'Troublemaker' and 'Locked Out Of Heaven' all costing £2.99 each. That's a sale of £8.97 from these three requests.

 

Ok, so that's possibly never going to happen but it makes me wonder why they can't trial something like this. Obviously I wouldn't even begin to imagine what the costs would be to have such facilities in store, and how much it'd cost to maintain these facilities over a long period of time.

It's a shame HMV can't just introduce some type of CD single making booth. Select the CD (complete with b-side/remixes - or the extra tracks on the EP in these case). Insert blank CD, wait a few minutes for tracks to be burned onto blank CD. Meanwhile, artwork is printed off and after a few minutes waiting, et voila a CD single of 'Diamonds', 'Troublemaker' and 'Locked Out Of Heaven' all costing £2.99 each. That's a sale of £8.97 from these three requests.

 

Ok, so that's possibly never going to happen but it makes me wonder why they can't trial something like this. Obviously I wouldn't even begin to imagine what the costs would be to have such facilities in store, and how much it'd cost to maintain these facilities over a long period of time.

They would also need more room to put these booths, and if it's popular, room for extra queues! But I think the idea itself is a fantastic one!

 

-

 

By the way, Pop B!tch, I hope you don't mind me asking but just out of curiosity, which HMV do you work at?

Edited December 13, 201212 yr by liamk97

Wow. That's such a shame. :(

 

I hope that something positive comes out of all of this though (e.g. a new store selling CDs and DVDs for low prices).

Edited December 13, 201212 yr by ★ G R I E F ★

I hope that something positive comes out of all of this though (e.g. a new store selling CDs and DVDs for low prices).

I would hope so too, but if the biggest music store is struggling, I don't know how a new business are going to settle! :(

 

If HMV does close down, I hope it can become just an online store, like Woolworths.

They would also need more room to put these booths, and if it's popular, room for extra queues! But I think the idea itself is a fantastic one!

 

Good idea having booths in the long run, but will the older generation (50+) use them.

It's a shame HMV can't just introduce some type of CD single making booth. Select the CD (ie; 'Diamonds' tracklist would be that of the EP on iTunes). Insert blank CD, wait a few minutes for tracks to be burned onto blank CD. Meanwhile, artwork is printed off and et voila a CD single of 'Diamonds', 'Troublemaker' and 'Locked Out Of Heaven' all costing £2.99 each. That's a sale of £8.97 from these three requests.

 

Ok, so that's possibly never going to happen but it makes me wonder why they can't trial something like this. Obviously I wouldn't even begin to imagine what the costs would be to have such facilities in store, and how much it'd cost to maintain these facilities over a long period of time.

 

Iv often thought the same thing - Although we probably don't appreciate it there is still a huge market that have no idea/interest in downloading, Tesco trailed something similar to what you mentioned but seem to have dumped the idea however iv always thought something like that would work in HMV but there must be a reason why its not happened - Maybe the cost aspect exceeds the revenue it would generate.

If HMV does close down, I hope it can become just an online store, like Woolworths.

 

Hasn't the Woolworths website been shut down now though? They can't have been going on for THIS long...