HMV GROUP PLC

'HMV Group' is a retail company. Their stores are currently the largest high street music retailer in the UK (excluding supermarkets). Other retailers such as Virgin Megastore and, more recently, Internet retailers and supermarkets such as Tesco and Asda sell the same products at competitive prices.
HMV shops in Australia, Ireland and the UK use the HMV trademark with Nipper. In Asian markets, only the gramophone and not the dog is the HMV trademark. HMV stores in Canada do not have the rights to the Nipper trade mark. As of August 2006, there are over 400 HMV stores worldwide.^[2]

Contents

History

Mergers and takeovers

2005 & 2006

Ottakar's

Fopp

Australia

North America

Japan

References

External links

History

In 1921 the Gramophone Company opened the first HMV shop in London.
The chain continued to expand internationally through the 1990s. In 1998 HMV Media was created as a separate company leaving EMI with a 43% stake. The firm bought the Waterstone's chain of bookshops and merged them with Dillons. In 2002 it floated on the London Stock Exchange as HMV Group plc, leaving EMI with only a token holding.
At some point in the mid-1990s, following a nationwide expansion, HMV's stores over took rival chain Our Price in popularity, after a number of years of close and fierce competition with them since the late 1980s, a blow Our Price never recovered from.
Our Price did continue trading until the end of the decade and even merged with Richard Branson's Virgin stores for a number of years, during which time (both outlets combined) over took HMV, but this was too little to late and Our Price eventually closed some years later.
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.^[3]

Mergers and takeovers

2005 & 2006

For most of 2005 the HMV Group circled book chain Ottakar's in order to take the smaller firm over and then, like Dillons before it, merge it into the larger Waterstone's operation. Even though for a company like HMV this would prove a good fit, as many of the Ottakar's branches were in smaller towns and outposts, a large proportion of the book trade (writer, independent publishing companies as well as readers/fans) were against this move as they believed it would create a giant that would push out independent and interesting literature in favour of high volume turnover and price-led offers.
However, 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 Tuesday, 7th February, The HMV Group received a £762 million takeover bid (based on 190p a share) from Permira, however HMV rejected it as being an insufficient valuation of the company.^[4]
If Permira does win control of the company, and if Tim Waterstone does not launch a counter offer for the book retail operation that he formed in the 1980s, then Permira might merge the two chains into a major entertainment retail chain that follows the blueprint of stores from The Borders Group or decrease the floorspace away from music retailing in HMV in favour of expanding the book and DVD areas in-store.
Even with a revived bid that 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^[5], resulting in Permira's withdrawal from the bidding.^[6]

Ottakar's

The Competition Commission provisionally cleared HMV Group, through Waterstones, for takeover of the Ottakar's group on March 30, 2006. The Commission stated that the takeover would "not result in a substantial lessening of competition", and was "not likely to affect book prices, range of titles offered or quality of service." Through extensive research they also found that "contrary to widespread perception, Waterstone's, like Ottakar's, operates a book-buying system which mixes central and local input on stock selection."
Waterstones then announced that it had successfully negotiated a takeover of Ottakar's on May 31, 2006. HMV chief executive Alan Giles said in a statement: "A combined Waterstone's and Ottakar's business will create an exciting, quality bookseller, able to respond better to the increasingly competitive pressures of the retail market." Ottakar's chairman Philip Dunne said: "Over the last year the book market has undergone a significant change with new levels of competition from the supermarkets and online retailers impacting all specialist booksellers and in particular those with insufficient scale to compete on equal terms."

Fopp

In early July 2007, retailers Fopp went into administration. They closed 81 stores, making 700 people redundant. Towards the end of the month, HMV bought the Fopp brand and 6 of its stores. HMV claimed that the 6 stores had traded profitably prior to their closure, and that the deal would save around 70 jobs. They will continue to trade under the Fopp brand.^[7]

Australia

After 75 years of music retailing history and with 32 stores in Australia, the HMV Group decided in September 2005 to focus on the UK, Irish, Canadian and Asian markets and sell its HMV Australia subsidiary to Brazin Limited (known briefly in the UK as Sanity Music) for AUS$7.3m (£1.7m). HMV is currently breaking into far eastern markets by opening a number of stores in Japan and China.

North America

HMV had a handful of stores in the Eastern United States, which was overseen by HMV's Canadian operations. However, 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 £0.5 million in 2003 and £1 million in 2004, closed on 3 November 2006.^[8]
In contrast, HMV particularly has a strong position in Canada's music market, with 112 stores as of August 2006 and being named "Canadian Music Retailer of the Year" for almost two decades^[9]. HMV's initial entry into the Canadian market in 1988 coincided with the bankruptcy of the Canadian record store chain A&A Records, and HMV has also been cited as a contributor to the decline and eventual bankruptcy of the another major Canadian chain, Sam the Record Man.
HMV Canada has encountered controversy in recent years 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 punitive move include Alanis Morissette and The Rolling Stones^[10].

Japan

HMV Japan, which operates 62 shops, was sold to DSM Investment Catorce in late July 2007.^[7]

References

1. http://beta.hoovers.com/hmv/--ID__57099--/free-co-factsheet.xhtml
2. HMV Adds Gaming. Marketnews.ca. 28 August 2006. Retrieved 13 September 2006.
3. http://news.bbc.co.uk/1/hi/entertainment/6516235.stm
4. Retailer HMV rejects bid approach
5. HMV rejects second bid approach
6. HMV suitor Permira abandons bid
7. HMV snaps up Fopp name and stores
8. Operating Review HMV Group plc .
9. . It has managed to take over the Virgin Megastore in Vancouver in 2005, allowing to own what it calls "Canada’s largest store dedicated to music and DVD" HMV to Open Canada’s Largest Store Dedicated to Music & DVD. Marketnews.ca. 28 June 2005. Retrieved 13 September 2006.
10. "HMV pulls Alanis product to protest Starbucks deal". CBC Arts. 14 June 2005. Retrieved 13 September 2006.
11. HMV snaps up Fopp name and stores

External links

★ HMV Group

★ HMV stores Canada

★ HMV stores UK

★ HMV stores Hong Kong

★ HMV stores Australia

★ HMV stores Japan