On Tuesday of this week (15th January 2013) HMV officially entered administration after a long battle of selling assets and obtaining stock in credit to secure their online and high-street presence. In just five years the stock market value of HMV has dropped from £650 million (2008) to just £47.65 million (2013) which works out as a £602.35 million loss.
Whilst a year ago stock suppliers obtained a 5% equity stake in the retailer, their help could just not stop the spiralling debts and 40% share drop seen last month. Neil Saunders, the managing director of the retail consultancy company Conlumino, made a statement claiming 'everyone has known that the writing was on the wall since the day someone first downloaded a digital song', although it was hoped by many that the 230 stores would remain on the high-street so that old-school record buying still had a presence and that 4,350 staff are left with a job. Speaking on Channel 5 News, the business secretary, Vince Cable, expressed deep concern regarding job losses as a result.
Whilst HMV could not contend with the lower overheads that other online retailers have, it was a blow to see that HMV are also not capable of trading online until the administrators have decided on its future; although the vast majority of the stores remain open.
Due to the huge debts faced, customers who have vouchers are no longer allowed to use these and are non-refundable and it is still unclear that the online purchases that were made prior to administration will continue to be honoured.
So, with this being said what exactly is the future for this historic company? Currently we are waiting for HMV to make a presentation to the banks which will ultimately decide on its immediate future. The likelihood is that there will indeed be at the very least 30% of HMV stores closed, as 48 stores already have been, with the potential to be much higher. This all depends if the banks and administrators think that anything can be salvaged here. As a consumer, we should prepare to witness the HMV presence crumble as the only way to make a higher profit will be via the website and the possible move into digital downloads. However, if HMV manages to reinvent itself in such a vast way that it attracts in more customers, then we may see an epic revival.
On Tuesday of this week (15th January 2013) HMV officially entered administration after a long battle of selling assets and obtaining stock in credit to secure their online and high-street presence...