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Record companies and DVD firms backing HMV to tune of £40 million in key Christmas quarter

By | Published on Wednesday 12 December 2012


The record companies and DVD distributors are providing extra support to HMV worth up to £40 million in the run up to Christmas, according to the Telegraph. The support stems from that previously reported revamp of relationships between the flagging retailer and its key suppliers back in January.

HMV, which sold off the rest of its live music division (more or less) to a management buy out backed by Lloyds Development Capital earlier this month, is set to publish interim results and an update on Christmas trading to the City tomorrow.

In September the retail firm, whose business is now very much focused on its high street stores (and a 50% stake in 7Digital), revealed that sales were down almost 12% in the first half of the year, but management said that they hoped a number of major music, DVD and gaming releases, coupled with the usual pre-Christmas rush, would help lessen the woes. To what extent that has happened could become clear tomorrow.

While the gaming sector seems to have accepted that its presence on the high street is already on borrowed time, with key publishers focusing on expanding their online sales, both the record and DVD industries, which rely more on casual customers and impulse purchases on the high street, are doing all they can to ensure that the UK’s last big specialist entertainment retailer doesn’t go the way of its former rivals Virgin Megastore/Zavvi and Woolworths.

To that end, and under the new supplier agreements struck in January, its thought that HMV has had access to large quantities of stock, including back catalogue, on ‘consignment’, so on a sale-or-return basis with little upfront cost on the retail firm’s part.

It’s logical to assume the retailer has made maximum use of this facility in the current pre-Christmas quarter, which is key, of course, both in terms of generating revenue and profit for the debt-laden retail firm, and in keeping money-lenders and investors on side.

While the Telegraph cites industry sources as estimating that the value of the music and movie industry’s support for HMV is currently worth £40 million, the retail company itself declined to comment on its supplier relationships.