Vinyl revival aids HMV turnaround Xtra-vision

Newsletter
Vinyl revival aids HMV turnaround
like sales increasing by 0.5%,
HMV managed to increase its
market share to 22% of the
visual market, making it the
largest retailer of DVD and
Blu-ray in the UK over the
key Christmas trading period.
HMV UK provided further evidence of its resilient
trading strategy at the end of 2014, revealing a 1.5%
increase in like for like CD sales and 0.5% increase
in DVD and Blu-Ray while sales of vinyl
albums rose by 170% year-on-year. Total
sales reached £365.7 million in the year to
December 2014 despite a 34% reduction
in retail space. Since its acquisition by
Hilco Capital in April 2013, HMV’s property
portfolio has been restructured with many
stores relocated to smaller locations better
suited to the product offering.
In the two weeks before Christmas, HMV
was the UK’s largest retailer of physical
entertainment products, accounting for
one in three sales of CDs and DVDs. Vinyl
sales in the week before Christmas were
the highest at HMV since the mid-1990s as the vinyl
revival continued to accelerate.
With fewer blockbuster movie releases than normal
in 2014, the DVD market came under more pressure
with a decline of 13% overall. However, with like for
Q4 2014
Xtra-vision
doubles footprint
Following a successful trial in
2014, Xtra-vision has announced
a partnership with grocery
market leader, Musgrave, that
will see 80 Xtra-vision Xpress
vending machines deployed
across Musgrave’s SuperValu
and Centra stores.
Over 300,000 customers
signed up to HMV’s renewed
Pure rewards scheme during
2014, qualifying them for
front-of-line access to
over 250 live in-store gigs
and signings, as well as an increasing number of
‘money can’t buy’ gifts and experiences such as red
carpet movie premieres and overseas VIP trips to
The deal will bring the total
number of machines, which
provide DVD and Blu-ray rentals
for €2.99, to 100 in the Republic
of Ireland with plans in place to
extend the rollout to Northern
Ireland later in the year.
international music and film festivals.
The programme of hmvLive in-store events was
significantly ramped up during the year with over
40,000 customers and Pure members attending
gigs and signings across the country. HMV p2 ➤
www.hilcocapital.com
The new machines will effectively
double Xtra-vision’s presence
in Ireland with just under 200
locations in total between the
retailer’s standalone stores and
the Xtra-vision Xpress vending
machines.
Newsletter
➤p1 has enjoyed support this
year from artists including
Sam Smith, Ed Sheeran, Take
That (pictured on previous page),
Olly Murs, Kasabian, Clean
Bandit and many others with
an increasing number of events
streamed live on hmv.com from
the company’s event venue, 363,
on the second floor of its famous
Oxford Street store.
Denby group ends sale process
sale process that was initiated in February.
The recent performance of the business and
substantial growth in its international markets in
particular convinced Denby’s shareholders that its
strong performance will continue to build in the
coming years.
Additionally, the company announced the departure
of Garry Biggs after serving 10 years as Denby’s
Managing Director and the appointment of former
GHD Chief Executive, Sebastian Lazell (pictured), to
fill the role.
Paul McGowan, Chairman of Denby and Chief
Executive of Hilco Capital, commented: “I would like
to thank Garry for his leadership and contribution to
the business during his time with Denby.”
Following another successful period of trading in
2014, Denby Holdings was officially taken off the
market by its shareholders and board of directors at
the end of the year, bringing to a close the business
The currently non-transactional,
editorial and content website
hmv.com (pictured) welcomes
an average of one million unique
visitors every month and is set
to be rolled out to Ireland and
Canada in early 2015 with local
content editors in each territory.
hmv.com is set to be integrated
with full ecommerce capabilities
during the first half of 2015,
marking the company’s return
to selling CDs, DVDs and
merchandise online in all of its
operating territories.
“Sebastian is a proven executive with a track record
of delivering both top line and bottom line growth.
We have owned Denby now for over five years and
look forward to working with Sebastian to take this
great British business forward.”
HMV Canada completes refinancing
The HMV Canada team made the bold move of
launching a new, transactional website just ahead
of the Black Friday weekend, a period of the
retail calendar more associated with well known
ecommerce sites collapsing under the strain of
unprecedented demand than new sites launching.
Thankfully, the relaunched hmv.ca, which sells
CDs, DVDs and entertainment merchandise, proved
an immediate success and made a significant
contribution to HMV Canada’s best ever Black
Friday. The business notched up sales in excess of
$7 million over the weekend as Canadians rushed
2 Hilco Capital Newsletter Q4 2014
online and into stores to pick up exclusive deals
and earn bonus Pure points. The retailer also found
time to open a new ‘bricks-and-mortar’ store in
Vancouver on 1st December, bringing its total retail
estate to 109 stores.
Closing another successful year, the company
completed a refinancing of its banking facilities with
Bank of Montreal in late December. The transaction,
which provides the business with a $30 million
facility though to 2017, demonstrates a vote of
confidence in the HMV business from a major
Canadian financial institution.
www.hilcocapital.com
Newsletter
Double digit growth at Kraus Group
Busy Q4 for Hilco’s
Retail Agents
in 2012, continued to gather
momentum during the year with a
streak of nine consecutive months
of year-on-year sales increases in
Canada, while the US division has
enjoyed sales increases for 15 of
the past 16 months. November saw
Kraus USA achieve its first $1 million
day as a result of a targeted carpet
tile promotion which landed the
company 11 new customer accounts.
Flooring manufacturer and distributor Kraus Group
reported double digit growth for the year, with
total revenues up 20%. Ending 2014 on a high,
the reinvigorated business saw December sales
increase by 26.2% over the prior year. Several new
product launches contributed to the company’s
success with the ‘Touch of Euro’ hardwoods and
‘Culbres’ luxury vinyl tile (pictured) both exceeding
initial sales forecasts by 500%.
The turnaround of the company, which was acquired
by Hilco Capital’s Canadian arm, Re:Capital Canada,
The
continuous
improvement
programme at the company’s Strudex manufacturing
plant saw 11 reciprocating compressors – which
were installed 45 years ago – replaced by just two
high efficiency rotary compressors. The new units
will reduce Kraus Group’s annual electricity bill by
$100,000 while saving 2.8 million litres of water
a year which was used to cool the old units. The
waste heat from the new system will instead be
used to heat the Strudex buildings. The compressor
replacement programme was awarded a six figure
grant by the government of Ontario’s ‘saveONenergy
for Business’ scheme.
Hilco launches recovery audit firm
Hilco Capital has launched a new business unit,
Hilco Profit Recovery, to provide recovery audit
services to identify and recover overpayments and
unclaimed rebates for its clients.
from a variety of industries, including accounts
payable managers, qualified accountants, lawyers
and surveyors. The team brings unparalleled
experience in recovering lost profits for major public,
private and third sector organisations across Europe.
Hilco Profit Recovery works on a completely risk-free,
‘no recovery, no fee’ basis, while future-proofing its
clients by providing targeted recommendations for
financial process improvements.
The Hilco Profit Recovery team, led by Philip
Fernandes, consists of experienced professionals
For further information, please contact:
[email protected]
www.hilcocapital.com
Hilco Capital’s retail consultancy
team was pressed into action
by a number of retailers and
professional advisers in the
fourth quarter to plan and
operate stock clearance and
store closure projects.
The Retail Agents team was
engaged by KPMG to operate
the store closure and stock
wholesaling processes for
cutlery brand, Viners, while Duff
& Phelps used Hilco’s team to
conduct a Store Closing sale
at department store JR Taylor
in Lytham St Annes. Retail
clients included a continental
department store group, a UK
home improvement chain and a
fashion retailer.
Hilco’s Retail Agents also
implemented and managed
relocation sales at several
HMV stores in the UK that were
moving to new sites as part
of the entertainment retailer’s
ongoing rightsizing strategy.
Hilco Capital Newsletter Q4 2014 3
Newsletter
Clipper Marine wins Boat Show award
Thanks to everyone who joined the Hilco Capital team
on Clipper Marine’s stand at the London Boat Show
in January (pictured). As always, the show provided
a welcome break from the post-Christmas blues
while the charity raffle raised £1,000 for Children
With Cancer, thanks to our guests’ generosity – a
sum which Hilco Capital is pleased to match.
Charters by Clipper Marine.
Congratulations to Duncan Lathwell from RBS
and Gillian Martin from Gately LLP who both win
skippered charter days courtesy of Bavaria Yacht
Prior to the London Boat Show, Clipper Marine
enjoyed a very strong end to the year with 46 boats
sold in the fourth quarter, including five in December.
The show was particularly successful for the Clipper
team as they sold a total of nine boats during the
event and went on to scoop the Garmin Award for
Outstanding Customer Service at the Motor Boat
Awards, held to coincide with the Boat Show.
NEWS
FROM
ACROSS
THE POND
Hilco Global formed a partnership
with private equity firm, Redwood
Capital, to redevelop the 3,100
acre Sparrows Point site in
Baltimore County, Maryland.
Formerly a steelworks, the new
development will create Sparrows
Point Terminal, a state-of-the-art,
tri-model transportation centre,
featuring a major seaport and a
truck and rail logistics centre.
Department store group, Saks,
appointed Hilco Fixed Asset
Recovery to liquidate furniture,
fixtures and equipment from its
former Saks Fifth Avenue store in
Sarasota, Florida and an off-price
Saks Off Fifth store in Minneapolis.
HFAR was also engaged by
PetSmart to liquidate six closing
locations during Q4.
HMV’s Nipper still London’s top dog
Hilco Streambank was retained
to sell the IP assets of South Africa
based international childrenswear
brand, Naartjie Custom Kids. Assets
include the worldwide trademark
portfolio, websites, domain names
and databases.
winning entry to a public caption competition – and
began using it on the company’s gramophones and
record labels. The brand proved so enduring that
eventually The Gramophone Company
itself – including its famous shop
at 363 Oxford Street – became
known as His Master’s Voice and
latterly, just by the initials, HMV.
Hilco Industrial acquired and will
sell the excess assets of Access
Business Group, a manufacturer of
products for Nutrilite, the world’s
leading brand of vitamin, mineral
and dietary supplements. Assets
include oxidisers, boilers and dust
collectors as well as pomegranate
and alfalfa crops, palm trees and
aloe plants.
HMV’s world famous brand mascot, Nipper, was
honoured with a blue plaque in December. The British
Plaque Trust erected the memorial at 126 Piccadilly
in London, the building in which artist Francis
Barraud created the original painting of
Nipper, ‘Dog Looking at and Listening
to a Phonograph’, which he went on
to sell to Emile Berliner, the inventor
of the gramophone.
Berliner had Barraud paint over the
Edison cylinder phonograph that was
originally featured to show one of his gramophones,
retitled the picture ‘His Master’s Voice’ – the
The new plaque is one of a
number of memorials to Nipper in
the UK, including statues and plaques
at his birthplace in Bristol and resting place in
Kingston-upon-Thames.
Hilco Real Estate was engaged
to sell properties across the US,
including an 130,000 square foot
shopping centre in Alabama and a
550 acre residential community in
South Carolina.
Published by Hilco Capital Limited, 80 New Bond Street, London W1S 1SB · Tel (0) 207 317 2050 · Fax (0) 207 317 2051 · © 2015 Hilco Capital Limited · All rights reserved
4 Hilco Capital Newsletter Q4 2014
www.hilcocapital.com