HMV enters administration for a second time after miserable Christmas
UK high street chain HMV has called in the administrators once again, placing 2,200 jobs at risk.
The entertainment chain, which barely survived a trip into administration exactly five years ago, will keep its 125 stores open as it continues talks with suppliers and seeks to find a permanent buyer.
HMV said a miserable Christmas sales period was responsible for the latest collapse. Even through HMV performed better than a 30% year-on-year deterioration in DVD sales across the industry, it wasn’t enough to keep the business running sustainably.
Paul McGowan, HMV executive chairman, said the company was not insulated from the struggled faced by the high street overall. The firm is also dealing with the dramatic proliferation of streaming services, which have rendered physical ownership of content less necessary.
He wrote: “During the key Christmas trading period, the market for DVDs fell by over 30% compared to the previous year, and while HMV performed considerably better than that, such a deterioration in a key sector of the market is unsustainable.
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“HMV has clearly not been insulated from the general malaise of the UK high street and has suffered the same challenges with business rates and other government-centric policies, which have led to increased fixed costs in the business.
“Business rates alone represent an annual cost to HMV in excess of £15m. Even an exceptionally well run and much-loved business such as HMV cannot withstand the tsunami of challenges facing UK retailers over the last 12 months, on top of such a dramatic change in consumer behaviour in the entertainment market.”
Meanwhile Netflix subscriptions continue to grow in the UK, with over 10 million households now signed up to the service.
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