updated 07:37 am EST, Tue January 15, 2013
Tough holiday sales, online retailers to blame for financial issues
UK retailer HMV is going into administration after a lengthy battle for custom against online retailers, shortly after photography chain Jessops did the same and closed its stores. Accountancy firm Deloitte will be operating the chain in the interim while searching for a buyer, and hopes to keep the 4,300 staff and 239 stores of the music, games, and film retailer open until a suitable plan of action has been outlined.
HMV, His Master's Voice as a full title and formed in 1921, has seen trading of its shares suspended on the London Stock Exchange, and according to the BBC, has been in a financial crisis for over a year. On December 13th, the company warned that it had issues with paying existing bank loan agreements, which caused the share price to drop. A recent month-long sale with 25-percent discounts led to speculation that poor Christmas sales left the company with far more stock than it was intending. Suppliers, music labels and film distributors, refused to help the retailer in the last few days, which in turn caused the move into administration.
Physical music sales have been dropping for a number of years, while digital revenues have grown heavily over time. The rise of iTunes and other music services forced HMV into other areas, such as movies and electronics, but the increased dominance of Amazon made trading conditions even harder for the firm.
HMV is the latest brick-and-mortar casualty of the growing online retail sector in the UK. Previously, Woolworths and Zavvi closed their stores after facing equally tough retail conditions, and UK stores are not the only ones in trouble. The chain of 26 Virgin Megastores in France are having similar issues, leading the French minister for culture, Aurielie Filippetti, to publicly complain about web-based retailers taking trade away from physical stores.