Future of Hong Kong's six HMV stores in balance as it calls in administrators

Uncertainty over city's six shops as accountants are called in to help save British music retailer

PUBLISHED : Wednesday, 16 January, 2013, 12:00am
UPDATED : Wednesday, 16 January, 2013, 9:39pm

The fate of HMV's six Hong Kong shops hangs in the balance after the British music and DVD retailer said yesterday it was seeking help to save it from collapse.

The crisis may also affect gift vouchers already in circulation, with staff telling customers in Hong Kong that these would remain valid only "until yesterday".

Gary Luk, of the marketing department of HMV Hong Kong, said the local office had not yet received instructions from its British headquarters.

But he said the business in Hong Kong would remain open and that gift vouchers could be used. However, sales staff at some of the six local branches said these coupons could be useless from today.

One cashier at the Central store said yesterday: "You'd better redeem [your voucher] today because we don't know if we can accept them tomorrow."

"What HMV means to Hong Kongers", Video by Hedy Bok

Another cashier in the Causeway Bay branch said it was up to the accounting firm Deloitte, which was brought in to try to save HMV, whether coupons would remain valid.

HMV employs about 4,350 staff worldwide, according to the company website, but there is no figure for its Hong Kong staff.

The 92-year-old company, which set up shop in Hong Kong in October 1994, announced late on Monday in London that it would enter administration.

It said it was "unable to reach a position where it feels able to continue to trade outside of insolvency protection".

HMV has struggled to meet the challenge of online retailing and digital downloading and has been teetering on the brink of collapse for many months. It has discounted heavily, with DVDs on sale for as little as HK$20. It warned last month it was in danger of breaching its bank loan obligations and has suspended trading of its shares in Britain.

A Hong Kong shopper, Zoe Keung, said HMV's poor sales strategies over recent years were to blame for its troubles.

"I don't understand why it designated so much space for earphones and they have a rather limited choice of CDs," she said at the Causeway Bay branch.

Analyst Kate Calvert, of Seymour Pierce brokers, said: "The problem [with HMV] is their core product categories are disappearing, and that's a very hard thing to fight."

The first HMV store opened on London's Oxford Street in 1921 under the ownership of the Gramophone Company.

The company gave HMV its legendary "His Master's Voice" trademark with the image of a dog listening to a gramophone.

Additional reporting by Agence France-Presse in London