Business News Retail

HMV stores in Hong Kong to close after tough year

By | Published on Wednesday 19 December 2018

HMV

HMV stores are to close in Hong Kong because they have been “unable to escape from the crushing force of the wheel of history”, according to a statement from parent company HMV Digital China Group. To be fair, that’s a pretty mighty wheel.

Hong Kong currently has seven HMV stores, all of which have been struggling of late. A drop in revenues of around 41% over the last year left the chain in financial difficulties. Unable to pay rents, a number of landlords recently launched legal action attempting to evict the firm from their premises. The cost of fighting these actions seems to have accelerated the business being placed into administration.

When the main HMV company in the UK went into administration back in 2013, it sold its Hong Kong and Singapore stores to a private equity firm, which in turn sold the Hong Kong outlets on to Chinese film company China 3D Digital Entertainment two years ago. That new parent company more recently changed its name to the HMV Digital China Group.

In a strategy alarmingly similar to the one that nearly pushed the HMV UK operation out of business six years ago, HMV Hong Kong switched its focus away from CDs and DVDs, instead pushing headphones and collectable toys as its main products. In its statement, the company specifically calls out Apple as one of the reasons for the business failing, though the problem wasn’t Apple’s digital music services but its headphones.

The statement says: “The emergence of [Apple’s] AirPods has resulted in a significant drop in sales for our bestselling earphones, coupled with a seemingly saturated market for speakers, the lack of improvement in the traditional audio-visual sales and a general change in the economic environment, which led to an overall decline in stores sales and in turn a rapid decrease in sales for HMV Retail in the past few months”.

Highlighting global issues for the retail sector – and its impact on other separate HMV businesses elsewhere – it goes on: “Suffering from operational difficulties, HMV Retail was unable to escape from the crushing force of the wheel of history. The HMV Retail business in Canada had closed all its 102 stores last year due to the impact of online streaming media, signifying the hardship in operating physical stores; and as HMV Retail stores in Hong Kong faces the same shock in recent months, it became an inevitable decision for us to wind up the business”.

Despite this negative view of the retail market today, the statement adds that liquidators will nevertheless attempt to find a buyer willing to keep the chain in operation.

Although the retail business was a significant subsidiary of HMV Digital China Group, the parent company also has interests in artist management; music, film and TV production; film distribution; and money lending. The statement stresses that these aspects of the business will be unaffected by the retail arm’s administration, although the parent company’s share price dipped by more than 20% upon the announcement yesterday.



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