HMV Group


HMV Group

Infobox_Company
company_name = HMV Group plc
company_| company_type = Public (lse|HMV)
foundation = London, England (1921)
location = Maidenhead, England, UK
key_people = Carl Symon (Chairman)
Simon Fox (CEO)
industry = Retail Record store
products = Recorded music, videos, DVDs, books, computer games
revenue = £1,936.1 million (2008)
operating_income= £66.3 million (2008)
net_income = £51.8 million (2008)
subsid = Fopp
Waterstones

num_employees =
homepage = [http://www.hmvgroup.com/ www.hmvgroup.com]

HMV Group (lse|HMV) is the largest high street entertainment specialist in the UK and Canada. Waterstone's, owned by HMV, is the UK's biggest high street bookseller. The Company also operate stores in Ireland, Hong Kong & Singapore. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

History

Early years

In 1921 the Gramophone Company opened the first HMV shop in London, England. [ [http://www.hmvgroup.com/aboutus/history.jsp HMV Group History] ] In March 1931 the Gramophone Company merged with Columbia Graphophone Company to form Electric and Musical Industries Ltd (EMI).

The chain continued to expand internationally through the 1990s. In 1998 HMV Media was demerged from EMI leaving EMI with a 43% stake in HMV Media. Later in 1998 the Company bought the Waterstone's chain of bookshops and merged them with Dillons. [ [http://news.bbc.co.uk/1/hi/business/59970.stm WH Smith unloads book shop chain] ] In 2002 the Company floated on the London Stock Exchange as HMV Group plc, leaving EMI with only a token holding. [ [http://findarticles.com/p/articles/mi_qn4158/is_20020503/ai_n12616649 HMV moves to reassure as IPO revival begins to falter] ] At some point in the mid-1990s, following a nationwide expansion, HMV's stores overtook 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) overtook HMV, but this was too little too late and Our Price eventually closed some years later.

Permira bid

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 conditional takeover bid (based on 190p a share) from Permira, however HMV rejected it as being an insufficient valuation of the company. [cite web
authorlink =
coauthors =
title = Retailer HMV rejects bid approach
publisher = BBC News
date = 7 February 2006
url = http://news.bbc.co.uk/2/hi/business/4690970.stm
format =
doi =
accessdate = 2006-12-30
quote = Music retailer HMV Group has rejected a £762m ($1.3bn) takeover approach from private equity group Permira. HMV said the 190 pence a share offer, which it received last month, undervalued the company.
]

Even with a revived conditional 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 [cite web
title = HMV rejects second bid approach
publisher = BBC News
date = 13 March 2006
url = http://news.bbc.co.uk/2/hi/business/4800548.stm
accessdate = 2006-12-30
quote = 'The board unanimously believes that the revised proposal from Permira continues to undervalue the group,' the company said.
] , resulting in Permira's withdrawal from the bidding. [cite web
title = HMV suitor Permira abandons bid
publisher = BBC News
date = 20 March 2006
url = http://news.bbc.co.uk/2/hi/business/4826132.stm
accessdate = 2006-12-30
quote = Permira said it was 'disappointed'... and would no longer be bidding for the firm.
]

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 Group's 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."

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 of dual location shops created by the acquisition of Ottakar's.

Recent developments

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. [ [http://news.bbc.co.uk/1/hi/entertainment/6516235.stm BBC NEWS | Entertainment | Gromit steps into HMV logo role ] ]

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 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. [cite news
title = HMV snaps up Fopp name and stores
url = http://news.bbc.co.uk/2/hi/business/6923511.stm
publisher = BBC News
date = 2007-07-31
accessdate = 2007-07-31
quote = 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.
]

Operations

United Kingdom

The Company operated 379 HMV shops and 313 Waterstone's shops as at 26 April 2008. [ [http://2008.hmvgroup.ry.com/busrev/ HMV Business Review] ] HMV shops in the UK and Ireland 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.

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 sold its HMV Australia subsidiary to Brazin Limited, known briefly in the UK as Sanity Music, for AUS$7.3m (£1.7m), which also operates the Sanity retail chain in Australia. The horizontal merger was approved by the Australian Competition and Consumer Commission in October 2005. [ [http://www.accc.gov.au/content/index.phtml/itemId/711552/fromItemId/751043 "Brazin Ltd - proposed acquisition of HMV Australia Pty Ltd"] ]

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 2004. [cite web
url = http://www.hmvgroup.com/files/923/HMV_Interim_2004.pdf
title = Operating Review
accessdate = 2006-12-30
author = HMV Group plc
authorlink = HMV
date = 17 January 2005
format = PDF
work = Interim Report 2004
publisher = HMV Group plc
pages = [http://www.hmvgroup.com/files/923/HMV_Interim_2004.pdf#page=6 pp. 3-4]
quote = ...HMV USA, where the last store [of which] closed on 3 November 2004."; "...a £1.0mloss last year and £0.8m of losses made in HMV USA in the prior year...
.
]

In contrast, HMV has a strong position in Canada's music market, with 116 stores as of October 2007 and being named "Canadian Music Retailer of the Year" for almost two decades. [ [http://www.marketnews.ca/news_detail.asp?nid=2084 HMV Adds Gaming] . Marketnews.ca. 28 August 2006. Retrieved 13 September 2006.] It has managed to take over the Virgin Megastore in Vancouver in 2005, allowing it to own what it calls "Canada’s largest store dedicated to music and DVD". [http://www.marketnews.ca/news_archive_detail.asp?nid=929 HMV to Open Canada’s Largest Store Dedicated to Music & DVD] . Marketnews.ca. 28 June 2005. Retrieved 13 September 2006.] 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 two other major Canadian chains, Sam the Record Man and Music World.

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. [ [http://www.cbc.ca/story/arts/national/2005/06/14/Arts/hmvalanis050614.html "HMV pulls Alanis product to protest Starbucks deal".] CBC Arts. 14 June 2005. Retrieved 13 September 2006.]

Japan

HMV Japan, which operates 62 shops, was sold to DSM Investment Catorce in late July 2007. The stores and HMV Japan website continue to trade as HMV, but will no longer be owned by HMV Group. [cite news
title = HMV snaps up Fopp name and stores
url = http://news.bbc.co.uk/2/hi/business/6923511.stm
work = Japan sale
publisher = BBC News
date = 2007-07-31
accessdate = 2007-07-31
quote = 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.
]

References

External links

* [http://www.hmvgroup.com HMV Group]


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