| Type | Public (LSE: HMV) |
|---|---|
| Industry | Retail |
| Founded | London, England (20 July 1921)[1] |
| Headquarters | Maidenhead, Berkshire, United Kingdom |
| Number of locations | 273 stores in 4 countries (2011)[2] |
| Area served | United Kingdom, Republic of Ireland, Hong Kong, Singapore |
| Key people | Philip Rowley (Chairman) Simon Fox (CEO) |
| Products | Books Video games Film Games Magazines Music Fashion Technology Merchandise Cinema Live Venues Ticketing Artist management |
| Revenue | £1,956.7 million (2009)[3] |
| Operating income | £70.3 million (2009)[3] |
| Net income | £44.2 million (2009)[3] |
| Employees | 13,801 (2009)[3] |
| Subsidiaries | Fopp MAMA Group 7digital (50% Stake) |
| Website | HMV Group, HMV UK, HMV Hong Kong |
HMV is a British global entertainment retail chain and is the largest of its kind in the United Kingdom and Ireland. The company also operates in Hong Kong and Singapore. It is listed on the London Stock Exchange and is a constituent of the FTSE Fledgling Index. Acquisitions by the HMV Group include Waterstone's in 1998 from W H Smith[1] (sold in 2011), the music retailer Fopp in August 2007, and selected Zavvi retail outlets in February 2009.[4]
Simon Fox has been Chief Executive Officer since 28 September 2006. For this role he is paid an annual salary of £873,000.[5] HMV stands for His Master's Voice, a painting created in 1899[6] by Francis Barraud, A.R.A., of the dog Nipper listening to a cylinder phonograph. For advertising purposes this was changed to a wind-up gramophone, and eventually used simply as a silhouette.
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In 1921, the Gramophone Company opened the first HMV shop in London, England;[7] the composer Sir Edward Elgar participated in the opening ceremonies.[8] In March 1931 the Gramophone Company merged with Columbia Graphophone Company to form Electric and Musical Industries Ltd (EMI).
From the 1930s onwards, HMV manufactured radio and television sets under the HMV and Marconiphone brand names in their factory at Hayes Middlesex. The name HMV became synonymous with the highest quality; an HMV radiogram with a Garrard automatic record changer was regarded as the Rolls Royce of radio and carried a correspondingly high price tag. There were to be seen only in the homes of the upper middle class such as doctors and solicitors. They were also popular as a retirement present for long serving company executives.
In 1966, HMV began expanding its retail operations in London. Throughout the 1970s, the company continued to expand, doubling in size, and in six years became the country's leading specialist music retailers. It faced new competition, however, from Virgin Megastores, established in 1976, and Our Price, established in 1972.[8] Subsequently, HMV overtook Our Price in popularity and threatened their existence, having established a chain of newer, larger stores.
Growth continued for a third decade in the 1990s. In 1996, when the company celebrated its 75 year anniversary, there were over 300 HMV Music stores internationally.[8]
In 1998, HMV Media was spun off from EMI, leaving EMI with a 43% stake in HMV Media. The same year, the Company bought the Waterstone's chain of bookshops and merged them with Dillons.[9]
From March 1999 through September 2006, Alan Giles was the CEO.[10][11]
In 2002, the company floated on the London Stock Exchange as HMV Group plc, leaving EMI with only a token holding.[12]
All HMV stores in Germany were closed in 2003.
In 2006, the HMV Group took over the Ottakar's book chain, via Waterstone's, with which it was merged into, in a similar situation to the acquisition of Dillons. This merger tied in to HMV's strategy for growth, as many of the Ottakar's branches were in smaller towns and outposts.
The Christmas period of 2005 was disastrous for the HMV Group, with many product areas falling in sales. As a result, HMV itself became susceptible to a takeover, this time from a private equity firm called Permira. On 7 February 2006, HMV Group received a £762 million conditional takeover bid (based on 190p a share) from Permira, however it was rejected on the basis that it was an insufficient valuation of the company.[13]
On 13 March 2006, HMV released a press statement declining a second offer from the private equity firm, even though it increased the value of the company, HMV felt that their firm was being undervalued and so rejected that offer of takeover as well. By the beginning of March 2006, HMV released a statement that the Permira offer undervalued the medium and long term prospects for the Group,[14] resulting in Permira's withdrawal from the bidding.[15]
HMV began piloting their refreshed loyalty scheme during 2008 under the name "pure hmv".[16] The scheme had previously ceased to operate after being introduced in August 2003.
In 2007, HMV selected CLIC Sargent as its charity partner until 2010.[17]
In the 2008 MCV Industry Excellence Awards, HMV was given the title 'Entertainment Retailer of the Year'.[18]
On 1 September 2008, HMV Group launched Get Closer, a social networking site which allows users to import their own music library and rivals current providers including Napster and the iTunes Store which are both examples of an online music store.[19]
As part of chief executive Simon Fox's plans to turn the retailer into an entertainment group for all seasons, HMV started a joint venture with Curzon Artificial Eye to bring cinemas to HMV and Waterstone's stores across England. The first trial store was in Wimbledon, London. The cinema is located above the shop in a former storage room and has been converted in to three separate screens and a bar. It has its own entrance, so it can be accessed outside store hours, as well as one within the store. The trial was deemed a success and HMV plan to open more, with HMV in Cheltenham, Gloucestershire and Waterstone's in Piccadilly, London lined up next.[20]
On 5 January 2011, HMV announced that profits would be at the lower end of analysts' forecasts due to falling sales, resulting in the share price falling by 20%[21] and an announcement of the group's intention to close 40 HMV stores, as well as 20 Waterstone's stores, mainly in towns and cities where the company operates at multiple locations. The first of the store closures began at the end of January 2011.[22]
On 5 February 2011, HMV Ireland announced that its profits fell by almost 90% to €465,000 last year compared to €4.1 million the previous year.[23] It has not yet been confirmed whether some of the 27 stores operating in Ireland will cease trading under the redevelopment strategy currently being undertaken by HMV.
On 29 June 2011, the sale of Waterstone's to A&NN Capital Fund Management for £53 million was completed and was approved by the vast majority of shareholders at an emergency general meeting.[24]
The Competition Commission provisionally cleared HMV Group, through Waterstones, for takeover of the Ottakar's group on 30 March 2006. The Commission stated that the takeover would "not result in a substantial lessening of competition".[25]
Waterstones then announced that it had successfully negotiated a takeover of Ottakar's on 31 May 2006.[26]
All 130 Ottakar's stores were rebranded as Waterstone's prior to Christmas 2006. In March 2007, new Group CEO Simon Fox announced a 10% reduction over three years in the enlarged Waterstone's total store space, comprising mostly dual location shops created by the acquisition of Ottakar's.[27]
In early July 2007, retailers Fopp went into administration, with the closure of 81 stores and 700 staff made redundant. Towards the end of the month, HMV bought the Fopp brand and six of its stores. HMV claimed that the six stores had traded profitably prior to their closure, and that the deal would save around 70 jobs. They later added a seventh Fopp store to its portfolio. They will continue to trade under the Fopp brand. Since, HMV did have ten stores trading under the Fopp Banner, which included the opening two new stores in Exeter and Gower Street, London which did not have a Fopp Store previously. They closed the Fopp Exeter store on 30 January 2011 due to the recent developments surrounding HMV's share price fall. Nine stores are still open under HMV ownership.[28]
On 24 December 2008, Christmas Eve, HMV's rival Zavvi, also an entertainment retailer, entered into administration. On 14 January 2009, a placing announcement by the company revealed that they intend to acquire 14 of Zavvi's stores.[29]
On 18 February 2009, five additional Zavvi stores were purchased by HMV Group, all will be rebranded to HMV outlets. A 6th store has been taken over from Zavvi: this is a store in Exeter's modern Princesshay Development.[30] The acquisitions by HMV were investigated and cleared by the Office of Fair Trading in April 2009.[31]
By selling additional shares, the company will raise money to fund another joint venture with the MAMA Group, to run 11 live music venues, including the Hammersmith Apollo which is set to be renamed to the HMV Apollo. Other venues purchased include The Forum in London's Kentish Town, the Birmingham Institute and Aberdeen's Warehouse. HMV will also use the opportunity to create a tickets division which will have benefits for HMV loyalty card members.
A few months later HMV entered into a joint venture with MAMA Group. The Group had purchased a 50% stake in MAMA Group in January 2009 as part of a deal to introduce the HMV brand to live music venues, including the Hammersmith Apollo.[32] On 23 December 2009, it decided to buy the whole of the MAMA Group in a live music takeover deal worth £46m.
The company operates 379 HMV shops and 313 Waterstone's.(April 2008[33]) HMV shops in the UK and Ireland use the His Master's Voice trademark with Nipper the dog, though its design has been updated. HMV's flagship store in Dublin, Ireland has relegated music to the basement of the store.
On 1 April 2007, HMV Group announced that Gromit, the animated dog of Wallace and Gromit fame, would stand in for Nipper for a three month period, promoting children's DVDs in its UK stores.[34]
In 1994, HMV began operating in Hong Kong. HMV began relocating their store locations to shopping malls that are newly opened. HMV in Hong Kong appeals to the crowd that enjoy organized and free-sampling environment which many other records cannot match. However, the prices on their products especially those without promotion and discount are often higher than many independent record stores. HMV Hong Kong is the second place after UK that launched in-store digital kiosks. It is also the first in Asia.
There are currently five HMV stores in Hong Kong (the fifth is recently opened in Whampoa on 27 July 2011).
HMV Hong Kong once used the same stylized gramophone as HMV Japan, as shown in the accompanying photo. However, HMV Hong Kong's website presently displays the HMV UK & Ireland version of Nipper (without his gramophone), with the same lowercase logo as HMV UK & Ireland.
HMV was the second international music store to set up shop in Singapore, after Tower Records (which later closed down). It currently operates 2 stores in Singapore at 313@Somerset (which replaces one formerly in The Heeren), after closing the other at the CityLink underground mall, with a second one at Marina Square.
It is generally higher priced than other independent shops, and local chains like Gramophone and That CD Shop pose a serious challenge in terms of price competition. HMV, however, is the only store that also sells games, T-shirts, books and audio gear in addition to their music and video collection.
In September 2005, HMV Group decided to sell its 32 Australian stores to focus on the UK, Irish, Canadian and Asian markets. Under the HMV Australia subsidiary, these stores were sold to Brazin Limited, known briefly in the UK as Sanity Music, for AUS$7.3m (£1.7m). The company also operates the Sanity Entertainment and Virgin Entertainment (Virgin at Myer) retail chain in Australia. The horizontal merger was approved by the Australian Competition and Consumer Commission in October 2005.[35] The HMV group's agreement with Brazin is to phase out the HMV brand in Australia by 2010. Most HMV stores in Australia have very high overhead costs and most have been closed when their lease ends and the remaining stores converted into Sanity stores, if there is no Sanity store in the area.
HMV's Australian flagship store, located in Pitt Street Mall, Sydney, was shut down on Friday 31 August 2007, when the Mid City Centre shopping centre it was located in, was closed for demolition.
In 1988, HMV Group began operating in Canada. This coincided with the bankruptcy, a few years later, of the Canadian record store retail chain A&A Records. HMV has also been cited as a contributor to the decline and eventual bankruptcy of two other major Canadian chains, Sam the Record Man and Music World (HMV in Canada was created by EMI Music Canada's buyout of the faltering Mister Sound chain in the late 1980s.)
HMV stores in the U.S. and Canada did not have rights to the His Master's Voice trademark; in those countries, that trademark is part of the RCA trademark portfolio owned by Technicolor SA and licensed to others. HMV Canada applied for use of the trademark, but its application was abandoned in 2010.[36] Though the initials "HMV" originally came from the His Master's Voice trademark, HMV was not prevented from using its initials in the U.S. & Canada.
HMV had a handful of stores in the Eastern United States, which in their final years were overseen by HMV's Canadian operations. In the 1990s they had a significant presence in Manhattan.
Poor real estate decisions made in the early 1990s rendered the United States stores uneconomical and HMV gradually extricated itself from leases, with the final store in the United States, having lost £500,000 in 2003 and £1 million in 2004, closed on 3 November 2004.[37]
In contrast, HMV has a strong position in Canada's music market, with 116 stores as of October 2007. For the last two decades, HMV has been awarded "Canadian Music Retailer of the Year".[38]
In 2005, HMV Canada took over a Virgin Megastore in Vancouver, allowing it to own, "Canada’s largest store dedicated to music and DVD".[39]
In June 2010, HMV Canada launched Purehmv, a customer rewards program that offers store discounts and exclusive items across worlds of Music, Film, and Gaming in exchange for points gained in-store.
In recent years, HMV Canada has encountered controversy by removing from sale all music and video recordings made by artists that have made exclusive distribution deals with other retailers for particular limited-edition or early-release titles; artists affected by this move include Alanis Morissette, The Rolling Stones and KISS.[40]
In June 2011, HMV sold its Canadian stores for £2 million to Hilco UK, a firm specializing in failing retail stores.[41]
On 3 November 2011 it was announced that the iconic, flagship store in Downtown Vancouver, would close in January 2012, with no formal date given in a phone interview by President of Canadian operations. It was also noted that a smaller location would open in a different area of Downtown Vancouver at some time in the future, but no further details were disclosed. The same announcement brought forth detailed plans to close the location in Richmond Centre (mall) as well. [42]
In July 2007, HMV Japan, which operates 62 shops, was sold to DSM Investment Catorce. The stores and HMV Japan website continue to trade as HMV, but is no longer owned by HMV Group.[43]
Since JVC Kenwood Holdings (thru its JVC and Victor Entertainment subsidiaries) controls the His Master's Voice trademark in Japan, HMV Japan uses as its trademark a stylized gramophone of its own design.[44] As with the former U.S. & Canadian operations, HMV Japan's use of the initials "HMV" has never been challenged.
The first overseas branch of EMI was established in India in 1901. It went on make the first audio recording in India, of singer Gauhar Jan in 1902 and witnessed Indian cinema going talkies in 1931 leading to a boom in film based songs. The Gramophone Company of India was incorporated in 1946, and existed until 1985, when it was taken over by the RPG Group. On 2 November 2000, the company changed its name to Sa Re Ga Ma India Ltd.. Sa Re Ga Ma controls a large repertoire of Indian film and non-film music, spanning a century.[45]
HMV stores stock a range of products from audio, books, Blu-ray discs, CDs, computer software and hardware, DVDs, video games and most recently have expanded their range of clothing and fashion items through "The Studio" section of their stores.[46]