The HMV Hong Kong business has collapsed, with the chain’s owner appointing liquidators. In a statement, HMV Digital China Group chairman Stephen Shiu Jnr said the company was “unable to escape from the crushing force of the wheel of history” as live-streaming services like Spotify and Netflix made CDs and DVDs redundant.
The company is believed to have debts of HK$40 million and assets – mainly stock – of just $9 million. All seven stores have been closed and 80 staff laid off.
“The company is under negotiation with the landlords of the settlement plans. HMV Retail has not been generating sufficient revenue to cover its own operating expenses and there is no reasonable prospect of making any significant improvement on its financial performance or operations in the foreseeable future.”
As reported last week, HMV was facing three legal suits over unpaid rents on stores, totalling $5 million. One of those related to its four-story Causeway Bay flagship.
After the chain last went into administration in 2013, private equity company AID Partners converted the business into more of a lifestyle destination, stocking headphones, bicycles, backpacks and other curated products. That met with some success, and AID sold the business to Shiu’s company in 2016 for $408 million. Yesterday, Shiu cited Apple’s AirPods for eroding demand for earphones, which had become a core category.
“[We have] faced numerous struggles and ups and downs, witnessing the rise of the record industry and the heyday of CD, VCD and DVD home entertainment systems, but as time changes, the global development of information and economic climate have also changed”, the company said Shiu.
The HMV Hong Kong business achieved a profit of $1.85 million in the September quarter last year – but during the same period this year, retail sales fell 41 per cent to $31.55 million and the business lost $18.81 million.
The liquidators, Wong Sun-keung and Janice Tsui Mei-yuk of Vision AS will try to find new investors to refinance HMV Retail’s operations, although clearly any solution would involve adopting an entirely new business model.