HMV Group: Wikis

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HMV Group PLC
Type Public (LSE: HMV)
Founded London, England in 1921
Headquarters Maidenhead, Berkshire, England
Number of locations 692 Stores, 7 Countries (2008)[1]
Area served The United Kingdom,[1] Republic of Ireland, Canada, Hong Kong and Singapore
Key people Carl Symon (Chairman)
Simon Fox (CEO)
Neil Bright[2]
Industry Entertainment Retail
Products Books
Consoles
DVDs
Games
Magazines
Music
T-Shirts
Revenue £1,936.1 million[3] (2008)
Operating income £66.2 million[3] (2008)
Net income £51.8 million[3] (2008)
Employees 11,200 (2006)[4]
Subsidiaries Fopp
Waterstone's
7digital(50% Stake)
Website HMV Group,
HMV Canada,
HMV UK

HMV Group (LSE: HMV) is an international entertainment retail chain and is the largest of its kind in the United Kingdom and Canada. The company also operates stores in Ireland, Hong Kong and Singapore. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. Acquisitions by the HMV Group include Waterstone's in 1998 from W H Smith,[1] the music retailer Fopp in August 2007, and selected Zavvi retail outlets in February 2009.[5]

Simon Fox has been Chief Executive Officer since 28 September 2006. For this role he is paid an annual salary of £493,000.[6]

HMV stands for His Master's Voice, a painting by Francis Barraud, A.R.A. of the dog Nipper listening to a wind-up gramophone. In the original painting, the dog was listening to a cylinder phonograph.

Contents

History

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1920s to 1990s

In 1921 the Gramophone Company opened the first HMV shop in London, England.[7] The store was opened by composer Sir Edward Elgar.[8] In March 1931 the Gramophone Company merged with Columbia Graphophone Company to form Electric and Musical Industries Ltd (EMI).

In 1966, HMV began expanding its retail operations in London. Throughout the 1970s, the company continued to expand, doubling in its size and in six years became the country's leading specialist music retailers though faced new competition from Virgin Megastores which was established in 1971 and Our Price, established a year later in 1972.[8] During this period, HMV overtook Our Price in popularity, having established a chain of newer, larger stores which threatened their existence.

The growth continued for a third decade in the 1990s. In 1996, there was over 300 HMV Music stores internationally, when the company celebrated its 75 year anniversary.[8]

In 1998 HMV Media was demerged 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]

2000s

In 2002 the Company floated on the London Stock Exchange as HMV Group plc, leaving EMI with only a token holding.[10]

A smaller HMV in Darlington, County Durham.

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.

Permira bid

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.[11]

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[12], resulting in Permira's withdrawal from the bidding.[13]

Ottakar's

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".[14]

Waterstones then announced that it had successfully negotiated a takeover of Ottakar's on 31 May 2006.[15]

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.[16]

Recent developments

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. HMV later added a seventh Fopp store to its portfolio. They will continue to trade under the Fopp brand.[17]

In 2007, HMV selected CLIC Sargent as its charity partner until 2010.[18]

In the 2008 MCV Industry Excellence Awards, HMV was given the title 'Entertainment Retailer of the Year'.[19]

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.[20]

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.[21] 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 Moshulu. HMV will also use the opportunity to create a tickets division which will have benefits for HMV loyalty card members.[22] HMV began piloting their refreshed loyalty scheme during 2008, and it will be expanded during 2009, under the name "pure hmv".[23] The scheme had previously ceased to operate after being introduced in August 2003.

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.[24] The acquisitions by HMV were investigated and cleared by the Office of Fair Trading in April 2009.[25]

In late 2009, more former Zavvi stores were purchased, including one in Coventry, where the existing HMV store was relocated.

HMV entered into an agreement to purchase the live music venue owner MAMA Group for £46m. The Group had purchased 9.9% of MAMA Group in January 2009 as part of a deal to introduce the HMV brand to live music venues, including the Hammersmith Apollo.[26]

Worldwide operations

Corporate identity

HMV shops in the UK and Ireland use the HMV trademark with Nipper the dog. In Asian markets, only the gramophone and not the dog is the HMV trademark. HMV stores in Canada do not currently have the rights to the Nipper trade mark, but have applied for use of the trade mark in Canada.[27]

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.[28]

United Kingdom and in the Republic Ireland

The company operates 379 HMV shops and 313 Waterstone's.(April 2008[29]) HMV shops in the UK and Ireland use the HMV trademark with Nipper.

Australia

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.[30] 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.

USA & Canada

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 had a handful of stores in the Eastern United States, which was overseen by HMV's Canadian operations. HMV stores in Canada do not have the rights to the Nipper trade mark.

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 2004.[31]

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".[32]

In 2005, HMV Canada took over a Virgin Megastore in Vancouver, allowing it to own, "Canada’s largest store dedicated to music and DVD".[33]

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 punitive move include Alanis Morissette and The Rolling Stones.[34]

Japan

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.[35]

Hong Kong

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 six HMV stores in Hong Kong.

India

Gramophone company HMV also had an existence in India till the late 90's but later it was taken over by the RPG Group. Now the company is known as SA RE GA MA Music India Ltd.

Product Range

HMV stores stock a range of products from Audio, Books, CDs, Computer software and hardware, DVDs and Video games.[36]

See also

References

  1. ^ a b c "About Us History". HMV Group. http://www.hmvgroup.com/aboutus/history.jsp. Retrieved 2009-01-15.  
  2. ^ "Management". HMV Group. http://www.hmvgroup.com/aboutus/management.jsp. Retrieved 2009-01-15.  
  3. ^ a b c "Fast Facts". HMV Group. http://www.hmvgroup.com/aboutus/fastfacts.jsp. Retrieved 2009-01-15.  
  4. ^ "FAQ". HMV Group. http://www.hmvgroup.com/aboutus/answer.jsp?id=328. Retrieved 2009-01-15.  
  5. ^ "HMV snaps up Fopp name and stores". BBC News. 2007-07-31. http://news.bbc.co.uk/1/hi/business/6923511.stm. Retrieved 2009-01-15.  
  6. ^ "Simon Fox: Executive Profile & Biography". BusinessWeek. McGraw-Hill. http://investing.businessweek.com/research/stocks/people/person.asp?personId=8291300&ric=HMV.L. Retrieved 18 August 2009.  
  7. ^ HMV Group History
  8. ^ a b c "EMI: A Brief History". BBC News. 2000-01-24. http://news.bbc.co.uk/1/hi/business/616485.stm. Retrieved 2009-01-15.  
  9. ^ WH Smith unloads book shop chain
  10. ^ HMV moves to reassure as IPO revival begins to falter
  11. ^ "Retailer HMV rejects bid approach". BBC News. 2006-03-13. http://news.bbc.co.uk/2/hi/business/4800548.stm. Retrieved 2009-01-15.  
  12. ^ "HMV rejects second bid approach". BBC News. 13 March 2006. http://news.bbc.co.uk/2/hi/business/4800548.stm. Retrieved 2006-12-30. "'The board unanimously believes that the revised proposal from Permira continues to undervalue the group,' the company said."  
  13. ^ "HMV suitor Permira abandons bid". BBC News. 20 March 2006. http://news.bbc.co.uk/2/hi/business/4826132.stm. Retrieved 2006-12-30. "Permira said it was 'disappointed'... and would no longer be bidding for the firm."  
  14. ^ "HMV merger with OOttakers cleared". Daily Telegraph. 2006-05-12. http://www.telegraph.co.uk/finance/2938612/HMV-merger-with-Ottakars-cleared.html. Retrieved 2009-08-16.  
  15. ^ "Ottaker's accepts HMV takeover though price is slashed". Guardian. 2006-06-01. http://www.guardian.co.uk/business/2006/jun/01/media. Retrieved 2009-08-16.  
  16. ^ "HMV to stay on High Street despite falling sales of CDs". The Independent. 2007-06-29. http://www.independent.co.uk/news/business/news/hmv-to-stay-on-high-street-despite-falling-sales-of-cds-455201.html. Retrieved 2009-08-16.  
  17. ^ "HMV snaps up Fopp name and stores". BBC News. 2007-07-31. http://news.bbc.co.uk/2/hi/business/6923511.stm. Retrieved 2007-07-31. "Fopp went into administration at the beginning of July, closing 81 stores and making about 700 people redundant. HMV said all six stores it was buying had traded profitably before they were closed and that the deal would save about 70 jobs. HMV later agreed a deal with the store landlord to add a seventh Fopp shop, in London, to its portfolio."  
  18. ^ "Partners". Clic Sargent. http://www.clicsargent.org.uk/Getinvolved/Corporatepartnerships/Currentcorporatepartners/HMV. Retrieved 2009-01-14.  
  19. ^ "MCV Awards '08". MCV. http://www.mcvuk.com/news/30160/MCV-Awards-08-The-winners-in-full. Retrieved 2008-04-14.  
  20. ^ "HMV tries to Get Closer with social networking test". Telegraph. 2008-04-26. http://www.telegraph.co.uk/finance/markets/2789004/HMV-tries-to-Get-Closer-with-social-networking-test.html. Retrieved 2009-01-15.  
  21. ^ "Placing announcement". HMV. 2009-01-14. http://www.hmvgroup.com/media/view.jsp?agreed=true&selectedDisclaimerCountry=UK&id=1271. Retrieved 2009-01-14.  
  22. ^ "HMV to snap up some Zavvi stores". BBC News. 2009-01-14. http://news.bbc.co.uk/1/hi/business/7829339.stm. Retrieved 2009-01-15.  
  23. ^ "HMV Plans Reward Card Roll Out". HMV. 2008-12-30. http://www.billboard.biz/bbbiz/content_display/industry/e3i935003166745e37d3e62fdb3722b6af0. Retrieved 2009-01-15.  
  24. ^ "End of the road for Zavvi". Manchester Evening News. 2009-02-18. http://www.manchestereveningnews.co.uk/news/business/s/1097409_end_of_the_road_for_zavvi. Retrieved 2009-02-18.  
  25. ^ "HMV/Zavvi". Office of Fair Trading. 28 April 2009. http://www.oft.gov.uk/advice_and_resources/resource_base/Mergers_home/Mergers_Cases/2009/hmv. Retrieved 24 December 2009.  
  26. ^ HMV buys MAMA Group in live music takeover deal BBC News Online. 23 December 2009
  27. ^ http://www.ic.gc.ca/app/opic-cipo/trdmrks/srch/vwTrdmrk.do;jsessionid=0000LLtCJxwrmM3pl-wC2RfjpfH:1247nfca5?lang=eng&fileNumber=1396181&extension=0&startingDocumentIndexOnPage=1
  28. ^ BBC NEWS | Entertainment | Gromit steps into HMV logo role
  29. ^ HMV Business Review
  30. ^ "Brazin Ltd - proposed acquisition of HMV Australia Pty Ltd"
  31. ^ HMV Group plc (17 January 2005). "Operating Review" (PDF). Interim Report 2004. HMV Group plc. pp. pp. 3-4. http://www.hmvgroup.com/files/923/HMV_Interim_2004.pdf. Retrieved 2006-12-30. "...HMV USA, where the last store [of which] closed on 3 November 2004."; "...a £1.0m loss last year and £0.8m of losses made in HMV USA in the prior year..."  .
  32. ^ HMV Adds Gaming. Marketnews.ca. 28 August 2006. Retrieved 13 September 2006.
  33. ^ HMV to Open Canada’s Largest Store Dedicated to Music & DVD. Marketnews.ca. 28 June 2005. Retrieved 13 September 2006.
  34. ^ "HMV pulls Alanis product to protest Starbucks deal". CBC Arts. 14 June 2005. Retrieved 13 September 2006.
  35. ^ "HMV snaps up Fopp name and stores". Japan sale (BBC News). 2007-07-31. http://news.bbc.co.uk/2/hi/business/6923511.stm. Retrieved 2007-07-31. "Separately, HMV said that the sale of the Japan business to DSM Investment Catorce, would allow it to focus on countries where it was a market leader. Opening in Tokyo's Shibuya district in 1990, HMV Japan now has 62 stores, with about 40 million visitors a year."  
  36. ^ "HMV". HMV. http://hmv.com/. Retrieved 2009-01-14.  

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