HMV Closure

Struggling HMV announce closure of 60 stores and redundancies as sales plummet

By Daily Mail Reporter

Last updated at 11:53 AM on 5th January 2011

* Comments (7)
* Add to My Stories
* Share

High street music and book retailer HMV Group has announced the closure of 60 stores and redundancies over the next 12 months.

The embattled retailer announced the cull as it struggles with tumbling sales amid a 13.6 per cent slump in like-for-like sales in UK and Ireland in the five weeks to January 1.

The group revealed it is also having difficulties meeting the terms of a bank loan.
Redundancies: The high street music and book retailer will close 60 stores over the next 12 months as it struggles to meet the terms of bank loans as well as plummeting sales

Redundancies: The high street music and book retailer will close 60 stores over the next 12 months as it struggles to meet the terms of bank loans as well as plummeting sales

Shares plummeted 24 per cent after the company, which has some 600 HMV and Waterstone's stores in the UK, warned profits for the year to April would be near the bottom of the current range of City forecasts.

David Jeary, a retail analyst at Investec Securities, said the company failed to improve UK sales despite easier comparatives with a year ago.

He added: 'While adverse weather undoubtedly was unhelpful to the business in the UK, the core HMV division remains under considerable stress as a format and this must raise questions over its long-term future.'

More...

* Latest share price for HMV Group {thisismoney.co.uk}
* Shares in the news {thisismoney.co.uk}

As well as the disruption caused by snow and ice before Christmas, HMV said its core entertainment markets remained weak and underlined the urgency with which it needed to carry out its turnaround strategy, which focuses on broadening the product mix.

Faced with competition from supermarkets in its core CD and DVD markets, the group has branched into new areas such as technology sales, recently including Apple's iPad, as well as entertainment-related products.

It has also pushed into fashion, mobile phones and Blu-ray discs, while its swoop for festivals and gig venue owner MAMA Group cemented its position in the fast-growing live market.

But it also pledged aggressive action on costs and said it would close 60 stores across its UK businesses over the next 12 months and seek a further £10 million a year of cost savings.

Some closures will include lapsed leases and stores in locations where there is more than one outlet.

The group confirmed there would be redundancies, but the number of job losses had not been determined.

A number of staff will be offered positions in other stores.
Looking to the future: A spokeswoman for the group said HMV, who also own Waterstone's bookshops, was still confident over its long-term future and believed the cost-cutting measures would help it meet the bank covenant test

Looking to the future: A spokeswoman for the group said HMV, who also own Waterstone's bookshops, was still confident over its long-term future and believed the cost-cutting measures would help it meet the bank covenant test

HMV admitted it is facing a battle to meet a test on its bank covenants in April, which is linked to its rental bill.

But a spokeswoman for the group said HMV was still confident over its long-term future and believed the cost-cutting measures would help it meet the bank covenant test.

She said the turnaround strategy was working, with strong sales in its live music division and in technology products, which were up 20 per cent in the period.

Waterstone's also showed improved sales, with a 0.4 per cent drop on a like-for-like basis in the five weeks to January 1.

HMV had hoped that a line-up including Take That and Cheryl Cole albums, DVD releases such as Toy Story 3 and Shrek 4, and new games Call Of Duty: Black Ops and FIFA 11 would boost trading over Christmas after a 16.1 per cent drop in like-for-like sales in the six months to the end of October.

But chief executive Simon Fox said the anticipated improvement in sales failed to materialise due to the weather and challenging markets.

He added: 'Whilst HMV has had a challenging year to date, it remains a profitable and cash-generative business and a powerful entertainment brand.

'The pace of change in the markets in which we operate underlines the urgency with which we must continue to transform this business.'

HMV said profits for the year to April were likely to be around the lower end of current market expectations of between £46 million and £60 million.

Despite HMV reporting a weak entertainment market, a survey by the British Video Association (BVA), showed consumers spent £2.6 billion last year on video entertainment - including DVD, Blu-ray and digital services.

The BVA said Avatar was the most popular title sold during the year, followed closely by Toy Story 3.

Read more: http://www.dailymail.co.uk/money/article-1344264/HMV-Group-announce-closure-60-stores-redundancies-sales-plummet.html#ixzz1MtCNZrpS


http://www.dailymail.co.uk/money/article-1344264/HMV-Group-announce-closure-60-stores-redundancies-sales-plummet.html

• Over the last ten years readers of the newspapers have dropped by 2.25 million.

• The Mirror has lost 750,000 readers in the last ten years, Sunday papers closely follow with a loss of 400,000 readers, and The Sun closely after with a loss of 400,000 readers however in the last year this figure has stayed the same for The Sun which is the only paper which has managed to do this. As readers have dropped advertisers have decided to withdraw many adds from papers and go elsewhere, this has has a dramatic impact on papers as advertisers mainly funded the papers. In fact a staggering 75% of revenue for local papers is from advertisers.

• In the mid 80's Rupert Merdoch revolutionized newspaper production by moveing his offices from the famous Fleet Street in london to brand new digital offices in Wapping. These offices allow digital production. This caused a riot due to other newspapers becoming angry that he had moved away from the heart of the paper production and moved onto using different technology.

• To keep Newspapers alive the companies have had to increase the cover price to make up for loss of sales, to make up the loss in advertisements they have changed to full colour presses to allow them to charge more to the advertisers they do have, and also gave away freebies with there papers. The Mail on Sunday around 2009 joined with McFly to 'give away' the bands new album to all its readers for free. This was achieved by the newspaper paying the band to use its album. This boosted sales among young people, the sales figures went from 2.1 million readers to 2.4 million readers.

• Some companies give away there newspapers for free, such as the Metro paper which is given out to people in places such as train stations on busses etc, this allows the company to get there papers read by people that wouldn't normally buy there paper. Often as the paper is at hand the commuter will read it as there is nothing else to read whilst on a journey. A whopping 45% of the newspaper is made up of adverts mean only 55% is actual news, they have dumbed down the content ! This shows where the paper is getting its income from ( advertisers) and how they manage to give it away free. If commuters are getting the option to have this paper free on the way to work are they likely to spend money purchasing a different paper? This will effect the sales of other papers which do give out a higher percentage of actual news however do not have as much funding to give away for free. During a documentary Janice Streetporter asked several commuters, after being given a free copy of the Metro paper, if they would buy this paper. A very high percentage said no they wouldn't due to the lack news and important information inside the paper.

• The web has allowed people to get access to news from the click of a button, websites such as Sky News, BBC and MSN give away there news stories online for free allowing anyone in the world access to stories whenever they want. This not only means people no longer have to purchase a newspaper but also means that newspaper sales have dramatical dropped and will continue to do so. Many people use a computer in there everyday lives, iPad's, Mobile phones, and other interactive tablets are becoming more internet friendly and have access to the internet. A business man carrying an iPad on a train will have access to the news through the iPad so why purchase the paper ? Many other news companies have attempted to make people pay to get access to there news stories, however with the competition high when up against the free websites it is proving a difficult task.

• More and more news companies are looking at ways to catch there audience as newspapers are begining to fade out. Quite alot have moved to more high tech ways such as using videos and audio that relate to the news stories. One Newspaper floor in particular has placed a 'Video Wall' in the center of the office which allows the workers to view all the latest news stories made up of lots of videos. They have also projected tables showing which story is the most popular to provide healthy competition between news reporters to get the 'best, most read story' and keep it at the top.

• Only one third of reads of the gaurdian are from the UK the rest access there stories online. However will advertisers pay to have there product displayed in a hard copy of a newspaper in a country that carnt access it ? A good example of this is McDonalds, would they have an add showing a burger for 99p when america uses dollars? Online news now uses semantic web (Web 3.0) which allows the website to store cookies into the readers computer which tells the site what they are interested and can also work out what country there are in from the IP address this allows the site to direct adverts to viewers which live in certain parts of the world and have particular interests. This can increase advertisers to advertise with a particular company if they can prove that allot of there readers are from other countries. Such as the Guardian.

Spotify

How have online media developed? :

Spotify was developed in 2006 in sweden. It is a music streaming service which is offered to people either as a free version or for £10 p/m as a premium service. The free version has advertisements after every few songs which are played whereas the premium version has no advertisements between songs and also allows users to use it on portable devices such as iPhones, as it is available to download via the app store. Originally to use spotify you had to recieve an invitation via email from an exsisting user, this was to allow spotify to keep control of the amount of people using the software. On 10th february 2009 Spotify changed from invitation only to available to everyone.

What has been the impact of the internet on media production?:

Most record labels have signed up to Spotify however some refuse to allow listeners to have access to there music for free. Led Zeppelin and Oasis are to name just a few who's music is unavailable to people with a UK I.P address. If people are usigned music artists it is possible to get your own music on Spotify. They offer a service which will help them have

How is consumer behavior and audience response transformed by online media, in relation to the past?

Founded: 2006 by Daniel Ek and Martin Lorentzon.

Location: Headquarters in the UK with offices in Stockholm, Paris, Oslo, Madrid, Amsterdam and New York.

Number of tracks: Over 10,000,000

Registered users: 10,000,000

Paying users: 1,000,000

Goal: To help people to listen to whatever music they want, whenever they want, wherever they want.

Number of employees: 250

The name: A combination of spot and identify.

To what extent has convergence transformed the media?

Many pieces of software and websites now have converged with social networking sites to allow there users easier access, and less hassle for the user. Websites such as Blogger, YouTube
iTunes

Limewire

Peering

perfect storm

free creativity

democracy

thinking globally

Useful Links

http://mediaandtheonlineage.blogspot.com/

hsfc.blackboard.com

First Post

On Your Blogg You Should Have:
1) Links to Useful Websites
2) Summary of Key Points from The Virtual Revolution and brief history of the web
3) Summary of the Long Tail Theory
4) Summery of the social network and the key issues raised, you may want to research the background of mark zuckerburg
5. Wikinomics -
Acitivity 1 - appliction of 5 big ideas
Activity 2 - critique of thoery