High rents blamed for collapse of HMV
Published 12/02/2013 | 12:48
HIGH rents as well as online competition have been blamed for the collapse of HMV in Ireland.
Last ditch attempts to rescue the music and entertainment retailer failed after administrators could not find a buyer.
Sixteen stores which had been shut down last month will not reopen and 300 staff who were temporarily laid off will be made redundant.
"The marketplace is very difficult given competition from web-based retailers and digital downloads, compounded by a number of other factors including high levels of rent," he said.
"All stores were loss making and it was not possible to attract a purchaser."
Employees will only be offered the minimum statutory redundancy payment - generally two weeks pay for every year of service plus an extra week.
A spokesman for the receiver also confirmed that any outstanding pre-paid gift vouchers for HMV would not be honoured.
The Irish division of the high street retailer was put into receivership on January 16.
The closure of the stores at the time - including HMV's flagship in Dublin's Grafton Street, Patrick Street in Cork, the Crescent Centre in Limerick and Johnston Court in Sligo - was initially intended as a temporary measure.
It is understood some landlords had made conditional and tentative agreements to reduce rents on some premises as part of a rescue plan.
However, the savings offered were not enough given the depth of the chain's financial difficulties.
There were a number of parties who were interested in stepping in to buy stock from the stores. But according to a source close to the receivership process, the company owned very little stock.
HMV, which sells DVDs, CDs, computer games, music and audio technology, has been struggling for several years to survive in a vastly changed market with aggressive competition from supermarkets and online companies.
The UK arm of the retailer is under administration, with plans to shut down 66 of its 220 shops over the next two months, impacting 930 staff.
Talks are continuing there between Deloitte and restructuring firm Hilco - the group behind HMV Canada - which has already bought the company's debt.
A receiver is appointed to a company in an attempt to recover monies to repay debts while administration is a process employed when a company is insolvent and facing serious threats from creditors to put a stay on legal actions.
"HMV was an iconic part of the high street on this island," he said.
"Not only was it popular with Irish consumers of all ages, its 16 stores provided valued employment to hundreds of younger workers throughout the years."