HMV GOES UNDER (AGAIN)

HMV—the U.K.’s last remaining high-street entertainment retailer—has fallen into administration for the second time in six years thanks to a decline in the DVD market and rising business costs, putting over 2k jobs at risk.

Executive chairman of HMV and Hilco, Paul McGowan, said a 30% decline in the DVD market over the Christmas period alongside increased business rates are to blame. He explained, “HMV has clearly not been insulated from the general malaise of the U.K. 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 U.K. retailers over the last 12 months, on top of such a dramatic change in consumer behavior in the entertainment market.”

It’s not necessarily the end for the retail chain, which was saved by restructuring company Hilco back in 2013 after falling into administration for the first time. The firm was turned around, albeit temporarily, after closing nearly half of its 250 stores and refocusing on music and film, rather than technology.

According to its latest filed accounts for the year ending December 2017, HMV Retail Limited made an overall loss of £8.8m, up from £8.4m in 2016. Meanwhile, online competitor Amazon’s British business is booming, with profits for its U.K. Services arm (which employs more than two-thirds of its U.K. workforce) tripling to hit £70.6m last year.

Still, the U.K.’s Entertainment Retailers Association is remaining optimistic, with CEO Kim Bayley saying, “After what has been widely reported as a tough fourth quarter for retailers, HMV is not the only High Street name facing tough decisions right now. It is a fast-moving situation and it is too early to say how it will end.

“What is clear is that following its first move into administration in 2013, HMV has enjoyed a remarkable turnaround and it is conceivable that this will happen again. The fact is the physical entertainment market is still worth up to £2bn a year, so there is plenty of business there. For the sake of HMV’s staff, customers and suppliers, we are very much hoping HMV can turn things around again.”