Fox breaks from HMV

A couple of years back, Simon Fox turned down the chance to run ITV to stick the course of turning round HMV. He's sticking the course no more, as he's stepping down.

"I am proud to be leaving HMV with a profitable future secured," Fox said.

The word "future" is rather important there - he's leaving as the company is expected to announce a sixteen million quid loss, so his legacy appears to be a profit for 2012-2013 of ten million he's promised.

As he's not going to be there, he could announce that he fully expects Nipper to be reanimated in the next financial year and claim that as a legacy.

Fox hasn't really been a resounding success - he's spent the last few months of his time at the company trying to offload the live business he spent much of his earlier time trying to build up; his other boffo ideas have pretty much run into the sand - remember when HMV was going to open a chain of teeny tiny cinemas in the space above its stores? And the doomed attempt to create youth-club style games areas? Ooh, and intention to take on the consumer electronics market by flogging headphones?

Worse, the stores would have vanished entirely if it wasn't for a deal with the labels to keep it afloat. It's true that Fox should take some credit for having done that deal, but it has to be balanced out by the severe lack of flexibility in dealing with its new music business partners when shaping the group for the future.

So, it's going to be a tricky task for the new head of the company. Surely HMV have looked high and low for a leader who has experience of turning round failing retailers?

Trevor Moore, the former chief executive of photography chain Jessops, has been appointed as Fox's replacement.

Well, that explains why Trevor Moore was headhunted away from Jessops last month.

To be fair, while hiring someone from a high street photo shop to take over a high street record shop might sound like replacing asthma with bronchitis, Moore hasn't had a totally bad time of it in Jessops - the chain has been selling more digital cameras in an overall declining market; under his time at the top the company has had a significant growth in online sales; and a fusty, failing confused business has been tidied up. Even if Jessops isn't quite a household name, it has remained a strong high street presence and that's something of victory.

But, the bottom line is his last full year still saw the chain make nearly a million quid loss. So he's turned things around, but without moving them forward. It'll be interesting to see if he can actually make HMV profitable.

HMV scents victory in blood of its rival

HMV's Simon Fox is pretty upbeat, despite having told the city that it's been selling "dire" numbers of CDs and DVDs in recent weeks.

How come? He's convinced the collapse of Game will help his store.

Righto, Simon. Although the total disappearance of Borders, Woolworths, and Zavvi hasn't noticeably helped your company, you think the closure of just half the Game chain will?

He does have some sort of convoluted logic:

"We've lived through a number of collapses of rivals – Zavvi, Woolies, Game – and when they are struggling they flood the market with distressed stock, which causes great disruption. They have now gone from 600 stores to 300 and that means that our position on the high street as strengthened."

The last big high street rival in music sales - Borders - closed in 2009, so if the echo of its closing down sales are to blame for the poor sales of recorded music in your stores now, you've got serious ghost problems.

More to the point, Game isn't shutting half its stores because it's getting more business than it can handle. There's not much to pick up there, surely?

So, where now for HMV?

Now that - subject to paperwork - HMV has offloaded the slightly less unhealthy part of its business, what now for Nipper, Gennaro and the gang?

There's a strategy. Simon Fox is a man with a plan:

Fox said HMV's new strategy was to focus on building technology sales, including headphones, iPods and tablet computers such as the iPad. He said six stores using a new technology-led format had outperformed, and he wants another 150 shops to adopt the "new focus" by the autumn.

Yes, this is a totally different strategy from the one which saw stores being turned into glorified Youth Clubs. It's a different strategy from the one which saw them putting their name up outside live music venues. It's a different strategy from opening cinemas upstairs in HMV shops.

The man has had more cunning plans that a pile of deeply-discounted, unsold Blackadder boxsets.

So, how will this one work out? HMV isn't the most obvious place to go to buy an iPad, especially with Apple Stores all over the place. And iPads being flogged in Tesco to the other end of the market. And Dixons, Comet and Currys aren't exactly doing that well. And BestBuy is struggling to establish a toehold in the market.

But who knows - it might just work. And it's not like there won't be another sweat-soaked, panic-driven strategy coming along in a few months.

Mind you, it's not surprising that Fox is finding it hard to concentrate on giving HMV a point; he's got lots of other worries. Talking to Sky News after the Waterstones sale, Fox conceded that although the Waterstones sale will help him pay down HMV debt, the lack of Waterstones in the company will make borrowing more expensive for him. In fact, the increased rates of interest could be so high as to allow HMV to axe the deal to sell Waterstones, leaving it even further in a hole.

But maybe flogging a few iPads will help solve everything.

HMV: One day we'll tell our grandkids about shops that sold records

More mounting misery for HMV, as the chain have called in a slash-and-burn "debt management" team from KPMG as it struggles to meet its next loan repayment deadline.

These would be measures in addition to shutting stores - oh, and flogging off the Oxford Street store.

There is some glimmer of hope for the chain, in that it is still making profits - but as EMI has found, profit isn't always enough to be able to cope with the weight of debt some companies are carrying.

Simon Fox is going to meet with one of the insurance companies who are getting jumpy about underwriting wholesale sales to the chain, but even as he does that, other financial 'experts' are gathering to tut. The Guardian reports:

A report by small rating agency Riskdisk, seen by the Guardian, shows the group rating as "suspended". Its risk assessment simply states: "This company appears financially valueless."

The Guardian has spoken to suppliers who suggest that all that's keeping HMV afloat is that it is the last of its kind:

Another supplier, who also asked not to be named, suggested a reduction in credit insurance was unlikely to see the big labels and publishing houses cause problems for HMV. "There is going to be some serious brinkmanship from Simon Fox now. The labels are in a Catch 22. He can say [to labels]: 'You need me. If you lose me you are going to have to talk to the supermarkets – and you know how difficult they are'."

It's true, but it's only true while HMV have customers. If KPMG suggest offloading more stores, there's going to come a point where the number of people the HMV and Waterstones chains are selling too is so slim, labels and publishers might concede they're better off struggling with Tesco and schmoozing with Amazon.

Gennaro Castaldo Watch: He's the anti-Tony Hayward

Marketing Week takes Tony Hayward and BP to task - not, of course, for letting acres of oil swoosh into the oceans and killing birds and fish and people, but for the far worse crime of not being that good at handling the PR.

Where, though, will Marketing Week turn for an example of how it should be done? Who is the king of the well-managed PR campaign?

Step forward Gennaro Castaldo, HMV's head of on-off record briefings:

The challenges facing PR are increasing for brands across all sectors, says Gennaro Castaldo, head of press and PR at HMV. “There are so many channels now, particularly online and via social media, beyond the control of companies or their marketers.”

Oh, yes. People actually having conversations about companies without the company controlling them. Horrific, isn't it?

Gennaro turns his sad emoticon upside-down, though:

PR executed well can result in positive branded conversations on news, blogs and social media sites, adds Castaldo. “Just as new channels present new challenges, the accompanying opportunities are also getting bigger.”

You'll have noticed that Gennaro has seized this opportunity by - despite not actually saying anything at all - getting his company mentioned in Marketing Week with the impression that they're good at new media.

Mind you, HMV is quite good at old media - witness a just-this-side-of-fawning full page on HMV's Simon Fox, filling an entire page of this week's MediaGuardian.

How did HMV get a sledge of prime coverage about a shopkeeper in a media supplement? Great PR people, pure and simple. Nothing to do with Fox being a non-executive director of The Guardian, that's for sure.

(To be fair to MediaGuardian, they do refer to his job with them in the piece. But it'll be interesting to see how many other entertainment stores - the ones without shared executives - get to enthuse over their digital strategies at length in their pages in the coming weeks.)

On the downward spiral

Could there be a more thankless task than trying to keep HMV afloat, by means of putting a backwards-baseball-cap on Nipper and inviting kids in to hey, chill or whatever?

It turns out, yes: HMV chief executive Simon Fox is being talked of as the favourite to replace Michael Grade at ITV.

ITV is the one that has Coronation Street on it. You remember.