Canada stores sold in HMV revamp strategy

The sale of HMV Canada to retail restructuring firm Hilco UK for just £2m follows the group’s recent deal to offload the Waterstone’s book chain to Russian billionaire Alexander Mamut for £53m. The disposals should allow the heavily-indebted group to focus on its estate of around 260 stores in the UK and Ireland.

The retailer recently secured a new £220m debt facility covering the next two years.

“The board has fully explored the options available to it for HMV Canada, and believes that a sale to Hilco is the correct decision for the business at this time, whilst reducing the operating leverage in the continuing group,” said chief executive Simon Fox.

“Having received shareholder approval for the disposal of Waterstone’s, and with a refinancing in place, the group is focusing on clear and tightly-defined plans for transforming HMV into a broad-based entertainment business.”

HMV Canada’s first store opened in 1986 and it has grown to become a market leader with operating profits of £2.3m and sales of £222m in its last financial year.

Hilco said it will provide HMV Canada with a working capital facility of up to 25m Canadian dollars (£15.8m) to turn around the business and plans to develop a digital platform.

Hilco UK chief executive Paul McGowan said: “The management team of HMV Canada have built a plan that will extend the period over which the residual hard-copy music and film market can be maintained.”

HMV has been battered by increasing competition from supermarkets and internet retailers. It hopes to revive its core business by selling more gadgets such as iPads and iPods, as well as developing its live entertainment division.