HMV: “We are not pulling out of entertainment retail”

The news shocked the music industry and CEO Simon Fox spent much of the day reassuring observers that HMV will do all it can to make sure closures don’t dramatically affect sales.

He told Music Week that the company needed to take these steps to make sure it remains a profitable, long-term business, adding, “We think the sales impact [of these closures] will be minimised by our actions.”

Now, the company has released a statement in which it points out that the closures represent less than 10% of its combined estate and will largely take place “in large-city conurbations and may be in close proximity to each other – thus resulting in a degree of duplication in relation to local demand”.

“This move in no way signals any intention to pull out of entertainment retail, which remains at the heart of our offer, and is ultimately aimed at safeguarding our core business as we continue our transformation into a broad-based entertainment brand that now also encompasses live music venues and festivals,” it adds.

PIAS sales director Richard Sefton was quick to defend the chain, which he calls “the last bastion of traditional high street retail”. “It is still a secure and very strong business. It is a significant part of our business,” he says.

Retail analysts, however, were less positive. Arden’s Nick Bubb calls the news “depressing” as HMV warned on profits and said it was close to breaching bank covenants.

“They are going to have to do something to slash the debt and I am not sure that closing stores will do that,” he tells Music Week. The most likely outcome, he believes, is that HMV will sell off Waterstone’s in a bid to reduce debt.

Source: Music Week