Can Hilco save HMV?

I've read and seen a lot over the last few days about Hilco rescuing HMV, so I thought it would be worth throwing in my fourpennyworth:

– Hilco seem to be a very clever operator. By acquiring HMV's debt from the banks for a fraction of it's value – they paid £40 million for £176 million of debt – they effectively blocked anyone else from taking over the company.

– It also means the £50 million they have agreed to pay for HMV comes straight back to them as preferential creditor and main beneficiary. Pure genius.

– A lot has been made of their success with HMV in Canada; however, I'm afraid the comparisons with the UK simply don't stack up. If you look at the stats for eCommerce and downloading in Canada, they are where the UK was two or three years ago, or more.

– Hilco do not have a track record of reviving companies, rather they nurse them through their final death throes, squeezing the most out of them. Other retailers they have been involved with are Allied Carpets, Clintons Cards, Allders Department Stores, JJB Sports, Borders and MVC.

 – By re-negotating rents with landlords, closing the worst stores, losing £136 million of debt and getting suppliers onside, they are looking at a much reduced cost structure.

– I'm sure Hilco have done their sums which show that with the new cost structure and based on their predicted rate of HMV sales decline, they can make some pretty healthy profits over the next two to three years.

– In 2010 Andrew Pepper and Paul McGowan, who run Hilco, paid themselves a £22 million dividend.

So in conclusion, good luck to Hilco - they've taken the punt, stumped up some money and engineered the purchase very cleverly but lets not delude ourselves what it's all about. This is not about re-investing in the HMV brand and it's not about people who are passionate about the product. 

What I would say is that I think Hilco may have taken on a bigger punt than even they fully appreciate. Based on all the latest ONS figures on eCommerce and people accessing the web through mobile devices, and the huge growth in subscription music services like Spotify and 'showrooming'  data from the States, I believe the rate of sales decline at HMV (and other retailers of commodity products) is going to be much faster than anyone is currently predicting. This Christmas - the time of year when HMV traditionally did 80% of their business - it will simply fall off a cliff!