The HMV revival continues.
Since its rescue by Doug Putman five years ago, the entertainment retail chain has got to a point where it’s now expanding once again, having survived the impact of Covid on High Street retail.
Following its return to the London flagship store in November 2023, and Music Week’s report on a rare CD sales increase, the company recently issued positive financial results.
For the 12 months ending May 30, HMV’s parent company reported that revenue increased by 18% year-on-year to £177.9 million. Pre-tax profits were £5.28m compared to £1.97m in the prior year.
According to the results lodged at Companies House, HMV operates 121 stores and an e-commerce site. The company has transitioned HMV to a contemporary retail offering with 43 HMV Shop concept stores, which now accounts for the majority of revenue.
As well as exporting the concept to Ireland and Belgium, the business is “actively seeking to open both HMV and Fopp stores in new locations”.
The company doubled down on its vinyl offering at a time when the format has seen strong market growth with sales growing at their fastest rate this decade in 2023 – up 11.8% year-on-year to 6.1m units in 2023, according to BPI data.
The HMV Live and Local programme supports grassroots musicians and hosted around 2,500 in-store gigs in 2023.
Here, in an expanded version of an interview in the latest edition of Music Week, HMV, Fopp and Sunrise Records owner Doug Putman reflects on the first five years since he took control of HMV, the growth of physical music and expansion opportunities…
Why was it the right time to return to Oxford Street at the end of 2023?
“Rents and rates are better than they were – those were always going to be the two biggest things for us. My point was always, if we could get the right rent deal we would do it. And from the landlord’s perspective, do you want HMV or do you want a candy shop? The other thing is that the business is in a very different spot today than it was when I bought it. You had the bankruptcy, the administration and we just needed to fix the business, it was bleeding a lot of money. We were profitable last year [and in 2022], so I think we're at a different stage where we can reinvest in our business to do some cool, fun things like an Oxford Street, whereas on day one we couldn't afford to take any sort of risk.”
How do you reflect on the last five years since you came to the rescue of HMV?
“It's an interesting thing. Without us buying it, liquidation was going to happen, there was really no one else at the end of the day that wanted to do it. I feel lucky that I was in that spot. I own record chains in Canada, the US and the UK, and usually I get a hard time from indies. And, you know, I always say the same thing, which is that without an HMV, without Sunrise in Canada, there's not a lot of options to produce the product. So we're there to help grow the business; you need someone who's going to buy the quantities [of physical product]. It's worked really well for us. We hit it at just the right time – vinyl was really growing and, candidly, HMV wasn't as focused on vinyl when I bought it, they missed the boat there. But I think now you can see with the data and market share, HMV is a huge player in that, so it’s really good.”
How did vinyl perform in 2023 and what’s the outlook for this year?
“We had another year of growth, we're certainly the dominant seller of vinyl in the UK. We have a very high market share. We see vinyl continuing to grow for us in the foreseeable future. There are a lot of artists releasing variant editions and there are people wanting to pick up every one of the variants. The industry has been super-supportive of us [with exclusive vinyl editions], which is great. I think the industry really understands that a healthy, thriving HMV is a really good thing to have for the overall business. I'm very dedicated to making sure that HMV is here for the long term. The partnership with the labels and with the industry as a whole has been fantastic.”
Are there any pressures for the sector with vinyl?
“The biggest headwinds the industry has really got right now, when I look at it for our business, is certainly the pricing. You've got a cost of living crisis, food prices are crazy. So those are some market conditions that you really can't help, it's going to be what it's going to be. But I think having a team prepared for what, arguably, might be some tough times is an important thing. So those are some headwinds that we could certainly face, and that would change our trajectory of saying vinyl is going to have growth for us.”
We're certainly the dominant seller of vinyl in the UK
Doug Putman
CD is also showing some resilience, how did it perform for you in 2023?
“I obviously didn't own HMV [before 2019] but I think that's the first year we've seen growth in 10 or 15 years – it's been a long time. So it's been a while since there's been growth on CD, which is exciting. The price point is really great. Part of it is also, again, people want to buy everything that the artist is doing when they're really passionate about an artist.”
Is the CD format now getting more love from labels and artists?
“Physical overall has gone from this idea that it was going to disappear to actually being a really important piece of the business. Is it as big as streaming? Of course not. Is it going to be? No. But it's still a very valuable piece. Ultimately, if you're seeing growth in something, then it’s going to make you want to invest in it. People now see that it's doing a bit better than anticipated, so you're seeing a little bit more investment. We're still giving lots of space to CD, and even in the new store there's lots of space dedicated to it. So from our standpoint, we're going to continue with it. We're certainly not going to help the decline of CD, we want to keep seeing it out there and doing well.”
Has HMV learned to live alongside streaming when so many releases are digital-first?
“I'm always going to push and say, get it to us on time. I also think there's still an argument that having physical first makes even more sense, because of the dollars, right? But this is where the world is at – it was downloading for a time, now it's streaming for a time. From my perspective, it really doesn't change much for us. That customer has shifted, but I think we're also seeing that there are dual customers. There is the customer that will stream but will still come and buy an album from us. When I think about it that way, I actually think streaming was better for us than digital [downloads] because downloading is more expensive. It's a cheaper option to stream, so theoretically if someone wants to have a piece of physical and stream, it's actually cheaper for them to do that. I like the convenience of streaming. But at home, there are a lot of cases where streaming is fine, but it is really nice to put an album on.”
How would you describe HMV’s relationship with the music industry in 2024?
“The labels have been super-supportive of me, of HMV, they were there when it really counted. My pitch to everyone, whenever I do a new business, was always, ‘You're working with the owner’. If you get a commitment from me, it's not like getting one from Amazon where people change all the time, the buying team changes. We desperately needed the labels when we first bought it, and they continue to be very supportive. It's been a super-amicable relationship, we work well with each other. So, overall, I'm super-happy, but do I want more? You know, always, of course, you want more exclusives, you want more first-to-market [products], you want more artist signings. You want all those things that are going to help your business. But I couldn't ask for better partners in the business than the labels.”
You do a lot of in-stores for new and local artists around the country, is it important for HMV to be a community hub?
“Yeah, it's good for labels, it's good for us. It's good for the artists, it's good for our HMV customer, it's letting them get exposed to other things. People love being trendsetters and discovering things first. I think bringing in artists that maybe you haven't heard of before is an important thing. Music, ultimately, is about discovery.”
Finally, with this flagship HMV store, what are the growth opportunities you’re looking at?
“We’re definitely looking to buy more businesses, I love being in the UK. HMV will continue to invest, they've opened their first store in Ireland, they've opened their first store in Europe. There's still lots of expansion opportunity in the UK, specifically London. The flagship store will allow us to see what kind of volume we can do. But hopefully that leads us to opening up a few more stores in London.”
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