Sports Direct CEO Mike Ashley is purportedly in talks to rescue HMV from administration. A move that would further engage him with the UK games industry, having purchased a sizeable stake in GAME last year.
According to Sky News (via Retail Gazette), Ashley has held talks with HMV's suppliers "with a view to acquiring" the UK's national entertainment retailer following similar acquisitions of House of Fraser and Evans Cycles last year.
Following unsuccessful talks with its suppliers, the music, DVD, and games specialist retailer HMV filed a notice at the end of December that it intended to appoint administrators for the second time in six years. The 98-year-old retailer went into administration back in January 2013, too, but was saved by Hilco - which already owed HMV Canada - after which the company moved away from expanding its consumer "experiences" and video game efforts, and instead doubled down on its position as a leading movie and music distributor. By April 2013, 141 stores were saved, protecting over 2,600 jobs, but it's now reported that Hilco is "highly unlikely" to recover the £60+ million the company has lent HMV in full.
Stating that the DVD sector had declined 30 per cent over the festive period, HMV chair Paul McGowan said at the time that while HMV "performed considerably better than that, such a deterioration in a key sector of the market is unsustainable".
"HMV has clearly not been insulated from the general malaise of the UK High Street and has suffered the same challenges with Business Rates and other government-centric policies which have led to increased fixed costs in the business," McGowan said at the time. "Business rates alone represent an annual cost to HMV in excess of £15m. Even an exceptionally well-run and much-loved business such as HMV cannot withstand the tsunami of challenges facing UK retailers over the last 12 months on top of such a dramatic change in consumer behaviour in the entertainment market."
"After what has been widely reported as a tough fourth quarter for retailers, HMV is not the only High Street name facing tough decisions right now," said Entertainment Retailers Association CEO, Kim Bayley, reflecting on HMV's recent struggles. "It is a fast-moving situation and it is too early to say how it will end. What is clear is that following its first move into administration in 2013, HMV has enjoyed a remarkable turnaround and it is conceivable that this will happen again."