Restructuring specialist Hilco has sealed a deal to rescue DVD and music retailer HMV. Hilco, which already owns HMV Canada, said it had acquired 132 HMV shops and all nine branches of the Fopp chain in a deal that could protect 2,500 jobs.
HMV, the UK’s last remaining national music retailer, collapsed in January after months of financial crisis. It was hit hard by tough competition from online competitors, digital downloads and supermarkets. The deal is believed to be worth about £50m; however no figure has been officially announced.
Paul McGowan, Hilco’s chief executive said the company hoped to repeat its success with HMV Canada, which it acquired almost two years ago and which he said was now “trading strongly”.
He further added: “The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the UK business, but we believe it has a successful future ahead of it.”
Another Hilco executive, Ian Topping, said HMV would be withdrawing its decision to sell tablets and other devices in its stores, making way for “an enhanced music and visual range”.
At its peak, the music retailer had more than 400 shops around the world, over half of them in the UK.
HMV opened its first shop in 1921 on Oxford Street in London but from 2007 onwards, a series of turnaround plans saw the retailer expand into other areas, including a short-lived venture into live music venues, without solving its underlying issues.
Richard Perks from research firm Mintel told the BBC: “The trouble is that demand for CDs and DVDs is falling. It’s going to online streaming and CDs and DVDs take up a lot of space, the turnover is low, the margin is low and the sales are falling.”
Partner at advisory and restructuring firm Zolfo Cooper, Peter Saville, welcomed the announcement of the Hilco contract, describing it as “really positive news” for HMV and the wider UK retail sector.
He added: “Hilco understands the market well and is a seasoned high street veteran. The news that HMV is to continue trading will also be welcomed by suppliers, as an over-reliance on online channels may be uncomfortable.”
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