Sat, 12 Jan 2013 | BUSINESS SALE
News of a longer than normal HMV sale has sparked a fresh round of rumours about the future of the high street retailer.
It is no secret that the business has been struggling for some time now. The shift in the consumer approach to media and an ongoing shortage of disposable income has seen many customers look online for film and music, either through cheaper alternatives to high street stores - such as Amazon, Netflix or LoveFilm – or through free but illegal downloads.
Last year, HMV sold off most of its live music assets in a bid to pay down its debt, which stood at over £160 million in the middle of 2012. In June, American-German venture Stage C bought one of its best-known assets, the Hammersmith Apollo, for £32 million. In the fourth quarter, the company sold a number of smaller venues, including the Jazz Cafe and Barfly in Camden, Lovebox festival and the Ritz in Manchester for £7.3 million in a deal with the private equity arm of Lloyds Banking Group.
It had been hoped that the asset sale would help to get things back on track for HMV after the company managed to successfully negotiate an extension on its banking arrangements. However, the news that the business is continuing its Christmas and New Year sales with a month-long sale has prompted fresh concern.
The company is to slash 25 per cent off the prices of “a wide range of titles and products” for the next month. Laura Kuenssberg of ITV News noted that it's “not [HMV's] standard January sale, but trying [a] new tack to generate cash to meet bank covenants”. She added that the situation is “not good”.
Meanwhile, a spokesman from HMV told CNET's Nick Hide: “We thought we'd freshen our promotional mix up a bit and try something a bit different that will hopefully stand out from all the other sale offers on the high street right now.”
Things aren't over yet for HMV though and there is still a chance that the retailer will see things pick up as the economy drags its way back to growth. But this is unlikely to stop acquisition experts from keeping a very close eye on developments in the coming months.
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