HMV bosses 'confident of solution'
Bosses at stricken retail chain HMV today said they were “convinced” they can secure a future for the business despite collapsing into administration after poor Christmas sales.
Trevor Moore, chief executive of HMV, insisted there was a place for HMV on the high street and said he was “confident that we will find a solution”.
The group confirmed it had been a torrid Christmas for the retailer, saying sales had been disappointing after the failure to secure the supply of two key tablet computers saw it miss out on surging demand for the gadgets.
While it did not reveal its festive performance, HMV said sales declines remained around the 10.2% level seen in the half year to October 26.
The group’s 4,500 staff, 300 of which work in Ireland, face an uncertain future after it last night revealed its intention to appoint Deloitte as administrators, marking the latest in a run of high profile retail collapses following the demise of camera chain Jessops and electricals group Comet.
But Mr Moore – who also previously headed up failed retailer Jessops – said: “We remain convinced that we can find a successful business outcome.”
Sparking speculation of management involvement in an attempt to rescue the business, he said bosses remained “passionate” about the chain.
“I am every bit as passionate about HMV as I was when I joined in September. I’d like to be involved in the business going forward if the opportunity presented itself,” he said.
He added the group was doing “whatever we can in conjunction with Deloitte to safeguard jobs where possible”.
“I would like to personally pay tribute to the 4,500 people who work for HMV. Clearly this is a very worrying time for them and their families,” he said.
HMV admitted it had continued to sell vouchers and gift cards until yesterday, fuelling questions over the group's decision to offer them in the face of concerns over its future.
Many consumers have been left out of pocket after HMV stopped accepting gift vouchers.
The group said it had redeemed a significant amount of vouchers – more than had been sold – but only made the decision to stop issuing them yesterday when it became clear the company would need to call in administrators.
All of HMV’s 239 outlets – including nine Fopp stores – will remain open while Deloitte attempts to find a buyer for some or all of the business, although it is likely that there will be widespread store closures as a result of the collapse.
Online orders will also continue to be fulfilled, the group said.
Squeezed by internet retailers and supermarkets, whose scale has enabled them to offer CDs and DVDs at cheaper prices, HMV warned before Christmas that the entertainment group was in trouble.
Mr Moore said the group would fail to meet expectations for the year to April and that it would breach the terms of its loan agreements later this month.
Suppliers including Universal Music came to HMV’s rescue in January 2011 with a deal which helped the retailer shed some of its huge debt pile.
But according to the Financial Times, they balked at a request last week from HMV for about £300 million in additional financing to pay off its bank debt and fund an overhaul of the company’s business model.
However, HMV praised the “amazing support” it had received from suppliers throughout the firm’s trading troubles.
The role of HMV’s lenders in its collapse is also under scrutiny, especially given that lead banks Royal Bank of Scotland and Lloyds Banking Group are backed by taxpayer cash.
RBS said in a statement: “The banking group led by RBS and Lloyds Banking Group have provided significant support to HMV over the past two years, as it has sought to reshape and restructure its business in the face of extremely difficult trading conditions.
“Unfortunately, despite the best efforts of management, lenders and suppliers, it has not proven possible to avoid a formal insolvency process.”
HMV has sought to diversify into live venues and consumer electronics in recent years and was forced to sell off several parts of its business, including the Waterstones book retailer, to reduce its debt pile, while closing loss-making stores.
While it had hoped to carve a name for itself in the live music and festivals market, HMV sold its live music division Mama Group last year soon after it offloaded the Hammersmith Apollo as it sought to shore up its balance sheet and focus on its ailing retail division.
Neil Saunders, managing director of retail consultancy Conlumino, said the collapse of HMV was inevitable.
He added: “While many failures of recent times have been, at least in part, driven by the economy, HMV’s demise is a structural failure.
“In the digital era where 73.4% of music and film are downloaded or bought online, HMV’s business model has simply become increasingly irrelevant and unsustainable.”
But Mr Moore said there was a future for HMV on the high street, with digital sales only accounting for 25% of all entertainment business.
He added the group had viable plans to build a better online platform and capitalise on its unrivalled “knowledge and focus”.
“We have a plan in mind and don’t think it is beyond us to deliver it,” he said.