Retailer's 300 Irish jobs in doubt

 

HMV’s Irish stores are likely to be placed in receivership, posing a threat to 300 jobs, following the collapse of its British parent yesterday.

Accountancy firm Deloitte was appointed as administrator to the loss-making HMV Group in Britain yesterday after efforts to save the music and DVD retailer failed.

The move means that it is likely that a receiver will take charge of the music retailer’s Irish operation, which employs 300 people in 16 stores, in coming days.

The stores are continuing to trade, but yesterday there seemed to be little prospect that they would reverse a decision made earlier to stop accepting gift vouchers.

The move left thousands of people with effectively worthless HMV vouchers and drew protests from the Consumer Association of Ireland (CAI).

Spokespeople for both HMV and the administrators said the group made the decision because it feared that honouring the vouchers could breach insolvency laws in both jurisdictions.

According to their explanation, anyone with a voucher is effectively an “ordinary creditor”, in the same way as anyone else who is owed money by HMV.

The group’s spokeswoman said honouring the vouchers could mean that it was treating those creditors more favourably than others, which it is not supposed to do.

Chief executive of the Consumers' Association of Ireland, Dermott Jewell, condemned the move and warned that it would leave a lot of consumers feeling extremely frustrated.

“The stores are open and it is business as usual but they will not honour a contract with people who have vouchers,” he said.

“It is a very poor way of doing business and an extraordinary step to take if the administrators really want to encourage people to come through the doors.”

Mr Jewell said legislation was needed to protect consumers who were sold vouchers. He asked why they were being sold by the stores in the run-up to Christmas.

“Clearly staff did not know the extent of the difficulties being faced by their employer in the run-up to Christmas, but some senior management did and yet they allowed vouchers to be sold to people knowing they would be worthless within weeks.

“We need to know why this happened.”

The consumer agency said HMV’s decision not to honour vouchers was disappointing.

Using a credit card

People who bought vouchers using a credit card may be able to get a charge-back which would mean a refund from the credit card company, which could then go after HMV for recompense. Such a process is uncertain and certainly not fast.

HMV hopes the administration process could result in a sale of the business and its ultimate rescue.

Chief executive Trevor Moore expressed confidence that at least some of the 4,000 jobs under threat in Ireland and Britain may be saved if the retailer came through the administration process.

“I’m confident that we will find a solution,” said Mr Moore. “We remain convinced that we can find a successful business outcome.

“We know that HMV is a well-loved brand, which has a high level of support among the public, and we want to ensure that it remains on the high street.”

He said that he and finance director Ian Kenyon had begun working with Deloitte to evaluate options for the company, with a focus on safe-guarding jobs.

The growth of music downloading has put increasing pressure on HMV. Nearly three-quarters of all music is now sold in a purely digital format.

The overall group lost £36 million in the six months to October 27th last. Its Irish business reported that it lost €2 million in 2011.

HMV shares have been suspended from trading on the London Stock Exchange.

Street-level view: Shoppers’ reactions

Anne-Marie Knowles, Tallaght

“It’s really disappointing. The sales in there are really good. I’m surprised at them not accepting vouchers. DVDs and CDs may end up the same way as printed photos, but . . . a hard copy is for life.”

Andrea Bunea, Dublin

“I can’t believe it. I never would have thought they were in the position they seem to be in. I don’t understand why they’re not accepting vouchers. If it does go, I’ll miss it. It will be a major jobs blow too.”

Madeleine Skelley, Terenure

“My grandchildren have vouchers they never got to use. If it were me, I’d take the CDs, drop the voucher at the counter and walk out. I know there are jobs there and that it’s not their fault, but it’s the principle.”

Craig Cullen, Airfield

“I have a €20 voucher I can’t use now. I got it as a Christmas present from my aunt and I’m a bit annoyed. I mainly went in there for DVDs, but I’m not sure where I’ll get them now. I’ll probably buy them online.”

Online Customer views at irishtimes.com/videoplayer