As streaming’s popularity increases and sales of music on physical media continue their downward spiral (as Jim Cuddy sang in Superstar last night, “Start a business organics door to door ’cause nobody buys records here anymore”), HMV Canada has been sailing in rough waters — and the waves may be getting even higher.
The Globe And Mail reports that HMV Canada has heard that an affiliated company, which is a major lender, was scheduled to ask the Ontario Superior Court today to put the chain into receivership — a move which would effectively shutter more than 100 Canadian locations.
The Globular report says that documents filed with the court this week show that HMV attempted to gain support from major record labels and media groups to keep its stores open throughout this year. However, the fact that it owes amost $40 million to the HUK 10 firm could throw a rather large spanner into the works.
HUK 10 director Christopher Emmott says in an affidavit that “the debtor has been unable to reach an agreement with the major suppliers on mutually beneficial terms that would allow the debtor to address its immediate cash flow needs,” according to The Globe.
HMV and other retailers have taken a hit due to the shift away from purchases of CDs in favor of streaming. The chain has been losing money since 32013, and at the end of 2016, annual sales had dropped from $266 million to $193 million.
The continuous shift away from purchasing compact discs in favour of streaming has hurt HMV Canada, with the court filings also revealing that the chain has been losing money since 2013. At the end of 2016, its annual sales dropped from $266 million to $193 million. “As a result of the constant and significant shift in the way media is consumed by customers, especially in North America, the debtor has seen a consistent year-over-year decrease in the sale of physical media,” Emmott said.
HMV is not a stranger to disruptions: more than 100 Canadian locations were sold to the private equity division of Hilco International Holdings LLC in 2011. After that transaction, HMV expanded into DVDs, music accessories and clothing. However, it ostensibly did not contribute to paying the freight: Emmott says that HUK 10 has received no cash payments from HMV Canada since November 2014.