HMV Rescue Saves 141 Stores And 2,500 Jobs

Written By Unknown on Jumat, 05 April 2013 | 20.48

By Mark Kleinman, City Editor

HMV's future as a high street retailer has been salvaged in a £50m deal that secures 2,500 jobs on Britain's beleaguered high streets.

Hilco, a restructuring firm, confirmed on Friday morning that it had struck an agreement with Deloitte, the administrator to HMV, to rescue the retailer.

The deal, which was revealed exclusively by Sky News on Thursday night, will keep 141 shops open, including 25 which had already been earmarked for closure by Deloitte. All nine of the Fopp-branded shops are included in the transaction.

While that represents little more than half of HMV's UK stores that were open before it called in administrators in January, it represents a more optimistic outcome for the chain than many analysts had predicted.

Hilco acquired HMV's Canadian operations two years ago, since when the performance of the business has surpassed expectations.

Paul McGowan, Hilco chief executive, said the deal had the backing of key HMV suppliers and landlords.

He said: "We hope to replicate some of the success we have had in the Canadian market with the HMV Canada business which we acquired almost two years ago and which is now trading strongly.

"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."

Mr McGowan will become chairman of HMV, with two other Hilco executives taking key roles with the retailer.

HMV had been weighed down by a mountain of debt, allied to a combination of waning consumer confidence and intense pressure from supermarkets encroaching on its entertainment retailing turf, as well as the rapid rise of low-cost digital rivals.

Hilco said it would abandon a recently-introduced practice of selling tablets and other digital devices, using the space instead for an expanded music and visual entertainment range.

Ian Topping, one of the Hilco executives who will be involved in running HMV, said: "The reaction of the British public to the administration of HMV shows a strong desire for the business to continue to trade and we hope to play a constructive part in delivering that."

Hilco also confirmed that it would seek to re-establish a presence for HMV in Ireland.

Nick Edwards, joint administrator at Deloitte, said the deal "provides a solid financial footing on which the business can be taken forward".


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