What we know about Sunrise Records’ takeover of HMV UK

After negotiating throughout the night, Sunrise Records CEO Doug Putnam signed a deal to purchase HMV UK at 5:30 am London time Tuesday (February 5). Sunrise now has 127 new stores. What else do we know about the purchases?

1. We have no idea how much Doug paid. Details of the transaction haven’t been disclosed. The number $10 million has been thrown about.
2. Only about 100 stores will survive, resulting in the saving of 1,487 jobs. The rest (23 HMVs, four of the nine Fopp stores also owned by the company and some warehouse operations) will be close, putting 455 people out of work. This is actually a better outcome than most analysists were predicting.
3. The historic Oxford Street location—HMV’s flagship store–will close. Rents are just too high to make it work. HMV has maintained a presence on Oxford Street since its founding 1921.
4. HMV UK will move towards selling more vinyl and rely less on CDs and DVDs. This is part of the Canadian stores’ success story.
5. Further to that, a big initial challenge will be getting enough vinyl to stock the stores. That will take some time. However, the labels have signaled that they love the idea.
6. There will be a renewed effort to showcase live music in the stores.

Here’s the official press release:

LONDON, UK – The joint administrators of HMV have confirmed the sale of the businesses and assets to Sunrise Records & Entertainment Limited, whose shareholder is Doug Putman, owner of Sunrise Records in Canada.

Sunrise Records & Entertainment Limited will acquire 100 stores across the UK, and 1,487 store and head office employees will transfer as part of the transaction. The stores will continue to trade as HMV, with four stores continuing to trade as ‘Fopp’.

The administrators will retain a further 122 employees at warehouse functions to assist them in winding down operations. Unfortunately, 27 stores have not been acquired and will be closed with immediate effect, resulting in 455 redundancies.

Will Wright, Neil Gostelow and David Pike from KPMG’s Restructuring practice were appointed joint administrators on 28 December 2018.

Will Wright, a partner at KPMG and joint administrator, said:

“We are pleased to confirm this sale which, after a complex process, secures the continued trading of the majority of the business. Our immediate concern is now to support those employees that have unfortunately been made redundant.”

Neil Gostelow, partner at KPMG and joint administrator, added:

“We are grateful for the support of all key stakeholders including the suppliers whose support throughout this process has been key in securing this sale.”

Doug Putman, CEO of Sunrise Records, commented:

“We are delighted to acquire the most iconic music and entertainment business in the UK and add nearly 1,500 employees to our growing team. By catering to music and entertainment lovers, we are incredibly excited about the opportunity to engage customers with a diverse range of physical format content, and replicate our success in Canada.

“We know the physical media business is here to stay and we greatly appreciate all the support from the suppliers, landlords, employees and most importantly our customers.”

Read some industry analysis here.