HOW long can HMV rely on its suppliers to play Santa Claus? At the start of 2012, the long-suffering entertainment retailer forged a closer alliance with suppliers in return for a 2.5 per cent stake. Their support is understood to have run into tens of millions of pounds already, and to include supplying goods on consignment – sale or return – this Christmas. But it looks like cash-strapped HMV may already be returning to the well.
Chief executive Trevor Moore yesterday referred to HMV’s support from its suppliers and then said that developing that relationship further would be a key focus for next year.
HMV’s suppliers might wince to hear that their generosity has only just begun to be tested, but do they have much choice? HMV may not seem to have any cards left in its hand, but as the last big bricks and mortar supplier of CDs and DVDs, the major content owners like Universal Music need its high street presence to counterbalance the threat from low-margin digital files or deep online discounts from Amazon for the same physical goods. If HMV buckles, it will be a late Christmas gift for Jeff Bezos.
HMV is in terrible shape. Its interim results yesterday were below already low expectations. Having to sell off some of its more successful side projects like HMV Live to raise cash can bring only short term relief at best. But its massively Christmas-focused business – this quarter of its financial year brings in 46 per cent of its revenues – makes it vital to the legacy media firms that want to see their box sets under our trees. If it is lucky, they will decide to reach for the beard and red hat one more time.