U.K. music store HMV appoints administrators; another victim of the iTunes era?

U.K. music store HMV appoints administrators; another victim of the iTunes era?

Summary: UPDATED: U.K.-headquartered brick-and-mortar music store HMV has appointed administrators amid falling sales; another victim of the 'iTunes evolution'?

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U.K.-based music retail store HMV has appointed an administrator, amid falling sales and a tumbling share price, the company said in a statement today.

Updated at 4:55 p.m. ET: The statement read: "On 13 December 2012, [HMV] announced that as a result of current market trading conditions, the Company faced material uncertainties and that it was probable that the Group would not comply with its banking covenants at the end of January 2013. The Company also stated that it was in discussions with its banks."

"Since that date, the Company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach. However, the Board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the Company and certain of its subsidiaries with immediate effect."

"The Directors of the Company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business."

The music retailer also confirmed that its ordinary shares "will be suspended from trading on the London Stock Exchange with immediate effect," slightly more than a decade since it floated its initial public offering in 2002.

ITV News business editor Laura Kuenssberg broke the news earlier today. The music retailer has 239 stores and 4,350 employees across the U.K., Singapore, and Hong Kong. It's reported that Deloitte will appointed administrators for the ailing firm, though it's not clear whether or not any of the stores can be saved.

It comes on the same day that private equity firm Apollo Global Management reportedly said that it was not planning a takeover of HMV Group, despite buying some struggling British retailers in recent months. HMV also has a presence in Singapore and Hong Kong.

HMV has struggled during the December quarter after music, game and DVD sales declined, and warned that a poor start to its Christmas trading could lead to it breaching its banking agreements. This would, ultimately, leave the embattled company at the hands of its lenders.

On Thursday the company said it was extending its sales by another month in a bid to stay afloat, reports sister site CNET U.K. However, HMV Group saw its shares fall more than one-fifth following the sales launch.

hmv-lon-zaw2
HMV shares declined massively during the December holiday quarter. Credit: Google Finance.

Last year, HMV's Michele Tan told ZDNet that the company's business "remains strong," because it had "evolved from being just a music store to one offering books, games, electronic goods, accessories and even fashion apparel." However, today's news paints the company's picture in an entirely different light.

The fact remains that company's nowadays that have failed to adapt their business models in the face of the online retail and marketplace space will suffer massive declines. The fact of the matter is that 

Is HMV yet another victim of the 'iTunes evolution'? Quite possibly.

We've put in questions and requests for comment with HMV, but the duty press officer did not give a statement at this time outside U.K. business hours. Once we hear more, we'll keep you in the loop.

Topics: United Kingdom, Hong Kong

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2 comments
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  • More a sign of Internet vs high street.

    I think iTunes era is a bit misleading, I know plenty of people who still buy CD's, DVD's (not so much Bly-rays) and games. They just get them from amazon. Surely iTunes era is now starting to pass behind us? I'd say iTunes height was during the days of iPod... Now most people use their phone for day to day listening and most of the smart phone market is android... Or non - iTunes compatible?

    I still get a lot of music from both iTunes and HMV, but amazon is by far and away my first stop. I'm probably one of the last of my generation to still buy a lot of CD's, preferring not to have downloads that belong to any particular store... I also still use an iPod classic for lossless music storage.

    However surely nothing was going to save HMV? I work 20 minutes from their Oxford street store; the only one that could hope to carry enough stock to compete with online warehouses, and going there is a nightmare; once all that stock is readily available, without a search box you can't find it. In reality people shop online for pricing and on the high street for convenience... Even at the flagship store it really wasn't a convenience.

    Regrettably they won't be the last, netflicks and love film will polish off the last blockbusters, and if the rumours about the hex Xbox being d/l content only turn out to be true, gamestation and co will follow quickly.

    HMV, even though you were only still useful for DVD's and sales, I'll miss you... And the Astoria... And my minidisc player.
    MarknWill
  • Not The Itunes Era, But The Napster Era

    Selling recordings of music was always going to be a dead-end business. As soon as technology began to surpass the neverending legal/political maneouvrings needed to keep the business propped up, it was inevitable it was going to collapse.

    That applies to downloads as well as physical prerecorded media.
    ldo17