British restructuring specialist Hilco UK has purchased Canada's 121 HMV stores, which saw profits plunge in recent years as music-buyers moved away from CDs.
Hilco UK announced Monday that it bought the Canadian arm of the company for the equivalent of $3.2 million, from Britain-based HMV Group PLC.
Hilco, a company that specialized in restructuring failing businesses, has agreed to invest up to $25 million to fund the music, video game and DVD stores.
In recent years, HMV has been struggling to compete with other retailers, online sales and illegal downloading.
For the fiscal year that ended on April 24, 2010, HMV Canada posted sales of about $350.8 million, but an operating profit of about $3.6 million. The company has already sold its Waterstone bookstore business in the U.K.
Hilco's website says it has been "involved with many of the most notable retail restructuring projects in the past 10 years in the U.K. and continental Europe." It lists Borders bookstores and Woolworth's department stores among its many success stories.
HMV Canada president Nick Williams said in a press release issued Monday that he plans to share more information on the company's future plans in the coming weeks.
Hilco's CEO Paul McGowan hinted at a new business model that would help smooth the transition from hard copy to digital music and film sales.
"The new product categories (HMV Canada) is introducing to the business will help sustain sales levels during the transition of entertainment sales into the digital realm," he said in the release, adding the company will begin selling streamed content in an attempt to expand its digital offerings.
As part of the sale, the HMV parent company retains an undisclosed amount of debt incurred by the Canadian arm.
Hot on the news of the transaction, shares in HMV dropped 0.6 per cent to about $0.15 in morning trading on the London Stock Exchange.
