His Master’s Voice is barely audible
Bought any 2 for €15s lately? How about a decade-old Stephen Fry novel for €5? HMV, it is feared, is “slowly being consigned to the history books”, according to one retail analyst (Keith Bowman at stockbrokers Hargreaves Lansdown) – and that was before the Christmas carnage. Today, HMV Group’s seasonal trading statement revealed a 14 per cent plummet in sales across the UK and Ireland, with the kicker being that it is to close 60 stores.
It is expected that around 40 of these will be HMV stores and as many as 20 of them could be outlets of Waterstones, the book chain that HMV bought in 1998. Whereas 12 months ago, it was the 8.5 per cent sales drop at Waterstones that led to a downbeat January for the group and the departure of Waterstones’ chief executive Gerry Johnson, this time around it is the music, DVDs and games end of the company that is suffering the most.
Reaction to its Christmas sales disaster has hardly been any more life-affirming than at the time of the group’s last set of figures, which saw its moves to diversify into clothing and electrical products described as “smack[ing] of desperation”, again by Bowman. To that, you can add changing stores layouts and the nagging sense that there is a perma-sale. “The market largely expected a profit warning, but the news is still depressing,” Arden Partners analyst Nick Bubb told Reuters this morning. The group is now taking about having to restructure its bank loans in order to avoid breaching its covenants, and Bubb reckons Waterstones could be sold.
Will HMV still be on high streets and in suburban shopping centres in five or 10 years’ time? As group chief executive Simon Fox said today, the retailer is still profitable. But its status as one of the last men standing in its category doesn’t seem to be insulating it from the fear that the business model of selling hard copies of entertainment products in a physical retail location is fading fast. The brashness of its brand, mainstream stock selections and prioritisation of the DVD market means it is also unlikely to be lamented by the few remaining music-buying stalwarts in the same way as independent record shops.
HMV’s dog and gramophone logo, adapted from a 19th century Francis Barraud painting called His Master’s Voice, tells us everything about its history and little about either its present or its future.