‘Cash in your gift cards NOW!’ HMV customers are told to use Christmas vouchers before they become worthless as retailer teeters on brink of collapse with 2,200 jobs at risk
- Music chain set to bring in administrators after sales dried up before Christmas
- Company – which previously went into administration in 2013 – has 2,200 staff
- It is feared other high street stores could follow as they are hammered by online
- Thousands who got gift vouchers for Christmas are rushing to spend them
Music store chain HMV is at risk of becoming the first high street casualty after Christmas as it teeters on the brink of administration.
Customers are today scrambling to spend their gift vouchers, which could become worthless if the company goes into administration.
The group, which trades from 130 stores and employs 2,200 staff, has filed a notice of intention to appoint administrators amid a cash crisis at the firm.
If HMV was to go bust, it would be the second time it has collapsed in recent years, having filed for administration in 2013, after which it was acquired by its current owner, Hilco.
HMV is on the brink of going into administration after struggling in the build-up to Christmas
People with vouchers for the store were today scrambling to spend them
KPMG is understood to be waiting in the wings to undertake the process, with an administration set to be announced as early as today.
Music-lovers who were given HMV vouchers for Christmas are rushing out to spend them today as those holding gift cards are usually treated as creditors if the company goes into administration, making it extremely difficult to redeem them for CDs or DVDs.
A similar situation took hold at House of Fraser earlier this year, when the company announced it would stop accepting gift vouchers after going into administration, causing fury among customers.
With today’s announcement coming just three days after Christmas, it is thought thousands of people around the country hold HMV vouchers given to them by relatives.
Experts say it is unlikely voucher-holders will be able to reclaim the value if the firm does go into the hands of receivers.
It may however be possible for the person who bought the voucher to get a refund from their bank if it was purchased on a credit card.
The chain has come under huge pressure from Amazon, as well as digital streaming services like Spotify for music and Netflix for films and TV series
Who are Hilco?
Hilco Capital is a restructuring company which rescued HMV when it previously entered administration in 2013.
The company specialises in buying up ailing retail brands and turning them around.
It was credited with taking the company from near collapse back to profitability during the first years of its control.
But the cash has apparently dried up at the company, which is expected to file for administration today.
‘It is disappointing to see the market, particularly for DVD, deteriorate so rapidly in the last 12 months as consumers switch at an ever increasing pace to digital service,’ said Paul McGowan, executive chairman of HMV and Hilco.
‘During the key Christmas trading period the market for DVD fell by over 30 percent compared to the previous year,’ he said, adding that this decline was ‘unsustainable’.
‘The switch to digital has accelerated dramatically this year, creating a void that we are no longer able to bridge,’ McGowan said, adding that the physical music market in Britain is forecast to fall by around 17 percent next year.
‘As a result, the directors have concluded that it will not be possible to continue to trade the business,’ he added.
It comes after a difficult pre-Christmas period for the high street. A near-deserted Leeds city centre is pictured just five days before Christmas
High business rates, weak consumer confidence and the rise of online streaming services will have taken their toll on HMV.
Earlier this month, retail experts revealed that Christmas footfall in the high street was down a staggering nine per cent compared to 2017.
The failure of another major high street name before the year is up would cap a miserable 12 months for the retail sector.
The likes of Poundworld, Toys’R’Us and Maplin have all gone bust this year, while heavyweights Marks & Spencer and Debenhams have announced plans to shutter hundreds of stores.
HMV has been hit by online services like Netflix and Spotify, meaning few buy DVDs or CDs
Several others – including Superdry, Carpetright and Card Factory – have all issued profit warnings.
High street retailers have been slashing prices after brutal trading in November and early December failed to lure shoppers to stores.
Traditional retailers have been battling the rise of online shopping, higher costs and low consumer confidence as shoppers rein in spending amid Brexit uncertainty.
Store faces crisis after nearly 100 years on the high street
HMV stands for His Master’s Voice, the name of an 1898 painting of a dog called Nipper listening to a cylinder phonograph.
Rights to the image were bought the following year by the Gramophone Company, who asked the artist to repaint the work with a wind-up gramophone.
The Gramophone Company opened the first HMV store on Oxford Street, central London, on 20 July 1921.
It later merged with the Columbia Gramophone Company in 1931, to become EMI. They opened HMV stores across the UK and by 1977 had 39 stores stretching from Glasgow to Brighton.
The label opened a store in Oxford Street in the 1920s. It is pictured in 1955
The Oxford Street store played an important part in helping the Beatles land their record deal – setting them on the path to becoming the biggest band in history.
In February 1962, the band had just been rejected by Decca Records, who famously said that ‘guitar groups are on the way out’.
Undeterred, manager Brian Epstein paid a visit to HMV to transfer the band’s demo tape to disc – and the engineer who helped him was so impressed he called a music publisher down to hear the record.
The publisher got in touch with George Martin, who was quick to sign up the band and later produced their legendary albums.
HMV Media Group broke away from EMI in 1998.
Nipper, the subject of the HMV logo, is buried in Kingston upon Thames in a small park surrounded by magnolia trees. A small road nearby was renamed Nipper Alley in his memory in 2010.
Which high street retailers have closed shops in 2018?
The year has seen a bloodbath of Britain’s high streets – with many of the nation’s retailers shutting stores and axing jobs.
Here are some of the big name retailers which have lost out as they face fierce competition from the rise of online shopping
Carpetright – The carpet retailer is closing 92 stores across the UK. These closures represent nearly a quarter of all UK Carpetright stores.
Toys R’ Us – The UK’s largest toy shop went into administration in February 201, leading to an estimated 2,000 redundancies.
House of Fraser – The department store chain was on the verge of heading into administration but was rescued at the eleventh hour by Sports Direct owner Mike Ashley.
Maplin – The electronics giant has gone bust, closing shops across the country and putting thousands of jobs at risk.
Mothercare – The baby and toddler chain is closing 60 shops across the UK putting up to 900 jobs at risk.
Poundworld – Poundworld announced it was going into administration on June 11 after talks with potential buyer R Capital broke down, putting 5,100 jobs at risk.
Homebase – The DIY chain set to close 42 DIY outlets shut, putting around 1,500 jobs at risk.
Marks & Spencer – The retailer announced in May it plans to close 100 stores by 2022, putting hundreds of jobs at risk. In August stores in Northampton, Falkirk, Kettering, Newmarket, New Mersey Speke, Stockton and Walsall all ceased trading.