THIS FEATURE WAS WRITTEN BEFORE TODAY'S NEWS THAT HMV HAS SIGNED A REFINANCING DEAL WITH RBS AND LLOYDS TSB.
I remember the last time we spoke to HMV chief Simon Fox.
He was in buoyant mood. The firm’s transformation plan – a bold ambition to move from being an entertainment retailer to becoming an entertainment ‘superbrand’ – was gaining support. The firm had acquired Gamerbase, 7Digital and live music specialist MAMA Group. Things were moving in the right direction.
A year later and the mood has changed. HMV had a tough Q4. Profit warning followed profit warning and suddenly the firm had one foot in the grave. Fox had been beaten up by the press, analysts, even suppliers. And in a bid to get things back on track, HMV sold Waterstone’s for £53m.
BACK ON TRACK
Fox might not have liked doing it, but it was a good move for both companies. Waterstone’s has a backer (Russian billionaire Alexander Mamut) that has the financial resources to support it. Meanwhile, HMV has given itself time to reduce its debt and renegotiate its credit facility.
“It is tough being knocked left and right by the press,” Fox tells MCV. “I look forward to putting that stuff behind us, getting out of the headlines and moving forward positively.
“The Waterstone’s sale gives us time to move the business on.
“We need to invest in our stores, we want to grow our share in games, and some of the merchandising and interactivity we’ve done needs to be rolled out across the estate. We are going to increase space to technology.
“We also need to build our online and digital presence. And we have had a good year with our Live division. We can now focus on being an entertainment brand.”
It’s refreshing to hear Fox talk of HMV’s future rather than HMV’s survival. But he can be under no illusions this time. There’s no more room for failure. Fox and his team have to change HMV, and quickly.
“It is going to be an evolution at speed,” he continues. “We need to change the mix of what we sell and we need to do that quickly. But we also have to stay true to our DNA.
“We are proud of our heritage as a mixed entertainment retailer with music at our heart. Yes, there will be a rapid evolution of how our stores look and feel and the products we sell, but it will still be HMV.”
A NEW LOOK
HMV’s stores will have a different look to them come 2012. They will be more open, clean-looking and more interactive with Gamerbase and hands-on tech areas. All things that are cropping up in HMVs already.
Fox says: “You have to give people reason to visit the stores rather than just purchase online. Stores have to be interesting, have to be inspiring and have to be fun.”
But HMV’s biggest challenge is going to be in the digital space. Back in 2009 the retailer acquired music download specialist 7Digital, so it has the specialist knowledge in-house. But it still hasn’t launched a movie or games download store.
“Through 7Digital, we are the in-bedded music store on the Blackberry playbook and a range of tablets,” adds Fox. “I think on these devices there is a host of opportunities for us. We started with music, but we are also offering an eBook service to Waterstone’s, and we need to evolve into games and film.”
But for all the talk of digital, new look stores and new products, HMV still needs to manage its finances. The sale of Waterstone’s has only gone so far, the firm may still need to sell off its Canadian business.
But at least with £53m now in the bank, HMV can take its foot out of that grave.