Music plays on for HMV with Hilco rescue

White knight Hilco has thrown HMV across its proverbial stallion and is riding off into the sunset, saving 2,500 jobs.

by Rebecca Burn-Callander
Last Updated: 29 Sep 2014
After months of hand wringing by HMV execs, a deal has been struck with restructuring specialist Hilco to save the beleaguered music and DVD retailer. Hilco has now acquired 132 HMV stores and all nine branches of HMV’s offshoot high street brand Fopp for an estimated £50m. This is great news for the high street stalwart’s 2,500 remaining staff : their jobs are safe. At least for now.

Hilco was an ideal suitor for HMV as it already owns HMV Canada and has strong relationships with the firm’s suppliers. This is going to be invaluable as HMV attempts to get itself back on track, having collapsed in January this year.

HMV has suffered from the rise in competition in the music, film and games markets – notably the explosion of online retailers with their non-existent overheads, mass discounting at supermarkets, digital downloads from the likes of iTunes, and the burgeoning ‘streaming’ market. However, Hilco, with its inside knowledge of the business must know something that the rest of us don’t. It’s not saving HMV out of the goodness of its heart.

It has, after all, made quite the success of the Canadian business, which Hilco has now run for two years and chief executive Paul McGowan describes as ‘trading strongly’.

McGowan isn’t kidding himself that the hugely competitive UK market is anything like the environment in Canada, where HMV benefits from its ‘last man standing’ status – it’s the last surviving bricks and mortar music retailer in the country. ‘The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the UK business, but we believe it has a successful future ahead of it,’ says McGowan.

It’s fair to say that the new UK business, downsized from more than 200 stores, should be much easier to manage now. Expensive real estate has been offloaded so that Hilco can focus on the more lucrative sites. It also, of course, comes happily shorn of debt, so a fresh start can be made with the banks too.

If HMV was an old jazz tune – well, the business was launched way back in 1921, Hilco is hoping to remix it into a trendy dubstep number. Whether this involves introducing a new in-store digital download division, or diversifying into tablet sales remains to be seen. But, for now, HMV’s iconic gramophone is plays on.

Find this article useful?

Get more great articles like this in your inbox every lunchtime