HMV just could not compete with the rise of music streaming and downloading; Canada’s biggest chain of brick-and-mortar stores for music CDs and film and television discs will be closing all 102 of its locations across the country this spring.
On Friday afternoon, an Ontario Superior Court of Justice approved an application to place HMV into receivership, forcing the retailer to shutter its operations. The application was submitted earlier in the week by HUK 10 Ltd., which provided the music chain with a loan to stay afloat.
Since 2011, HMV stores in Canada have operated independently of British-based HMV Retail Ltd. after the Canadian division was sold to Hilco UK, the company that owns HUK.
HMV has not followed HUK’s repayment schedule, to the extent that it owes $39 million in unpaid dues towards its debt since the fourth quarter of 2014.
An affidavit stated that the retailer would require $2 million immediately to stay open within the interim and then at least $5 million annually to continue operations over the long-term. The company has been bleeding in the red with approximately $100,000 in losses per day.
HMV employs over 1,300 people across Canada, and most of its positions are within its retail locations. As stipulated by the court-approved sales guidelines, all HMV stores in the country must shut down by April 30.
Following its acquisition by HUK, the Canadian division of HMV underwent a restructuring, which led to the closure of a number of stores including the flagship 40,000-square-foot, three-storey store in downtown Vancouver at the intersection of Burrard and Robson streets. Smaller flagship stores in downtown Toronto and downtown Montreal remained open after the restructuring, but will close following this week’s court ruling.
Store locations on Bloor Street and at Eaton Centre have also closed over the past year, but HMV opened a store inside the new Tsawwassen Mills shopping centre near Vancouver just last October.
HMV also made attempts to diversify beyond its traditional product offerings in the years since its restructuring by selling vintage items and pop culture merchandise such as posters, memorabilia, mugs, but that was not enough to save the retailer. To its creative credit, it even converted an underground level at its Toronto flagship into a live music and entertainment venue.
The growth of music streaming and downloading has been explosive in recent years, with well over one billion downloads on Apple’s iTunes in 2016 and over 40 million paying users on Spotify by the start of last year’s fourth quarter.
Expect liquidated pricing at HMV stores beginning next week in an attempt to sell most of the company’s merchandise stock before the court-approved closure date.