Media magnate Stephen Shiu Jr fights back tears as he reveals defunct HMV’s US$38 million losses in Hong Kong
- ‘HMV could not cope with the challenge of the digital age. It is a shame,’ says emotional tycoon
- Shiu said there may be a one-to-three day liquidation sale of the vendor’s remaining stock of CDs and DVDs at discount prices
HMV Digital China chairman Stephen Shiu Jr fought back tears as he apologised to creditors and staff in Hong Kong for having to close down the 25-year old music retailer at a meeting on Thursday.
The emotional tycoon revealed that the local unit of the iconic brand had suffered losses of HK$300 million (US$38.3 million) in just two years as it caved under the pressure of the digital downloads age. He also confirmed there were plans for a possible liquidation sale of the company’s remaining stock of CDs and DVDs lasting between one and three days at a location to be decided.
“I am deeply sorry to wind up HMV, which has led to substantial losses for all the creditors, suppliers and staff. I want to say I am very, very sorry to you all,” Shiu said, tears welling in his eyes, at the beginning of a meeting in Admiralty attended by about 150 creditors and employees.
“The parent company has invested and lost about HK$300 million (US$38.3 million) since the purchase of HMV in 2016. The business has declined very badly in recent months and we could no longer keep HMV retail going.”
It was the first time he has spoken publicly since the GEM-listed company HMV Digital China voluntarily wound up its retail unit, HMV, on December 18, caving under the pressure of the digital download era. The company also has film production and artist management businesses which are not affected.
After delivering the opening speech, Shiu told the South China Morning Post he would find a way to sell the remaining stock at a good price to recoup combined losses expect to be close to HK$40 million.
“If approved [by creditors], we will have a liquidation sale lasting for one to three days to sell the remaining stock of CDs, DVDs, ear phones and so on to try to recoup as much as possible for the creditors. We will find a location,” he said.
Wong Sun-keung and Janice Tsui Mei-yuk Janice, both of Vision A.S. Ltd, have been appointed as the joint provisional liquidators of HMV Retail to handle the assets, negotiate with the creditors and seek buyers.
Wong will spend one month trying to find a white knight, he told the Post after the creditors’ meeting.
“If we cannot find any white knight in about a month, we will arrange a liquidation sale by tender or find an ideal location for it,” he said.
He said the book value at cost of HMV’s assets including all CDs and DVDs stood at HK$9 million but since it will need to sell them at discount, a liquidation sale may only receive about HK$500,000 to HK$1 million.
“I have already been approached by some people who want to buy the vinyl records and the iconic HMV dog statues displayed at the shop. The HMV brand still has value. I am optimistic of recouping assets for the creditors,” Wong said.
At the meeting, it was revealed that there are 66 creditors claiming about HK$27 million. These included landlords, suppliers and design companies. Wong said there were an additional 300 creditors with outstanding debts of about HK$13 million.
The biggest creditors are Ever Light and Pridemax, both part of New World Development, which are claiming HK$10.14 million for unpaid rent at HMV’s two flagship stores in Causeway Bay and Central. New World Development declined to comment when contacted by the Post.
Ten days after Hong Kong HMV’s collapse the UK’s unit of HMV, which is under separate ownership, also went into administration. Shiu said it was a coincidence that showed the challenges faced by physical stores.
“After Hong Kong and UK HMV, Japan is now the only market that still has HMV shops operate,” Shiu said.
“High rent is a major problem for Hong Kong retailers. The sale of CDs and DVDs still count for 40 per cent of [HMV’s] business and they have been hard-hit by streaming. The popularity of Airpods have also hit our sales of ear phones,” he said, referring to Apple’s wireless ear phones.
“I am a fan of HMV. Our company will keep the brand for our online movie streaming business as HMVOD.
“We have tried our best to turn around HMV by adding restaurants and lifestyle products. It has not worked, as the traditional way of retailing has been challenged by online music, movie streaming and other online sales. HMV could not cope with the challenge of the digital age. It is a shame,” he said.