More than 4,000 jobs at risk as HMV teeters on brink of collapse: Firm calls in administrators after rescue talks fail
Retailer has struggled in the face of growing demand for digital downloadsCompany had a poor Christmas sales period239 stores and 4,350 staff face uncertainty as negotiations unfold
21:08 GMT, 14 January 2013
23:48 GMT, 14 January 2013
One of the most famous names on the high street, HMV, was on the brink of collapse tonight.
The music chain’s demise would cost 4,000 jobs and make it the second household name to go under already this year.
Administrators from City firm Deloitte were brought in tonight.
Rumours have surfaced that high street giant HMV will announce it is entering administration after poor Christmas sales
The writing had been on the wall since
the run-up to Christmas, when dire sales figures forced the firm to
admit it might breach the terms of its bank loans.
Last-ditch rescue talks tonight
failed to find a solution and HMV’s banks – state-backed Royal Bank of
Scotland and Lloyds – said they were unwilling to go on lending it
The move to go into administration follows the closure of camera chain Jessops with the loss of 1,300 jobs at the weekend.
It is still possible that a ‘white
knight’ buyer could ride to the company’s rescue at the last minute,
buying part or all of its 230-strong network of stores. If not it will
mean the end of a name that has graced the high street since 1921.
There was no sign of a saviour for HMV today, after US-based investment firm Apollo Management walked
away from takeover talks.
Shoppers have spurned physical copies of music, film and books for downloads from websites like iTunes and Amazon
Labour business spokesman Chuka Umunna
said: ‘For the sake of HMV’s employees, we hope a way can be found to
keep the business going – the demise of this institution would be a body
blow to British retail.’
HMV has struggled in the face of the growing popularity of downloads of music and films
HMV’s administration means it can
legally declare gift vouchers worthless, a blow for those who received
one as a Christmas gift.
But administrators could opt to keep
stores open during the process in order to raise funds by shifting as
much stock as possible. HMV failed to keep pace with the digital
revolution, as shoppers turned to online retailers such as Amazon.
Internet firms were able to undercut the company thanks to lower overheads.
It has also been under attack from
supermarkets such as Tesco and Sainsbury, which are able to offer
discount DVDs and CDs thanks to their size.
The beginning of this year has seen HMV offer massive discounts in the hope of filling its stores and boosting revenues.
But despite the efforts, dismal
Christmas sales were the final straw for the firm’s banks. HMV is
understood to have asked them for a 300million lifeline, but was turned
down on the evidence of its recent performance.
The decision by RBS and Lloyds to pull
the plug on HMV is likely to cause a backlash, given that they were
both bailed out by British taxpayers during the financial crisis.
The appeal for help from the two
lenders came just days after the company asked suppliers to give it
300million to pay off its debt and revamp its business model.
That request was also turned down.
HMV RUMOURED TO BE FLOUNDERING AFTER OVER 90 YEARS OF TRADING
HMV stands for His Master’s Voice, the name of an 1898 painting of a dog called Nipper listening to a cylinder phonograph (right).
Rights to the image were bought the following year by the Gramophone Company, who asked the artist to repaint the work with a wind-up gramophone.
The Gramophone Company opened the first HMV store on Oxford Street, central London, on 20 July 1921.
It later merged with the Columbia Gramophone Company in 1931, to become EMI. They opened HMV stores across the UK and by 1977 had 39 stores stretching from Glasgow to Brighton.
HMV Media Group broke away from EMI in 1998. Today the group runs 239 stores in the UK and Ireland.
The company has 4,350 employees in the UK.
Nipper, the subject of the HMV logo, is buried in Kingston upon Thames in a small park surrounded by magnolia trees. A small road nearby was renamed Nipper Alley in his memory in 2010.