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Simon Fox And Trevor Moore: Can We Blame The Former CEOs Of HMV, Comet And Jessops For Failure?

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Who's to blame for HMV's failure? Not just the CEOs, say analysts. Simon Fox, former chief executive officer of HMV Group Plc. Photographer: Matthew Lloyd/Bloomberg via Getty Images | Getty

The demise of HMV has thrown the spotlight onto its current chief executive - Trevor Moore - and his predecessor Simon Fox.

Moore previously ran Jessops, the high street camera retailer which was forced into administration last week - making it the first retail casualty of 2013.

Like HMV, Jessops entered into a debt for equity swap with the banks, leaving it heavily leveraged. And, like HMV, it struggled to make a mark in the online marketplace, although it supplied digital cameras, online retailers such as Amazon quickly muscled it out of the way.

Fox meanwhile has two failed companies on his CV; prior to being HMV's chief executive he worked as managing director of Comet, which he led through its demerger from Kingfisher, and then became chief operating officer at Kesa Electricals with responsibility for Comet in the UK, Kesa's subsidiaries in continental Europe and e-commerce developments.

His initial three years at HMV were greeted with positivity by the market - HMV's profits doubled, partly because he led it into new areas such as live music venues. But poor Christmas sales in 2010 resulted in it coming close to breaching its banking covenants.

Speaking to the Financial Times in August 2012, Fox said: "For 18 months it was a question of survival and crisis management. The business has come through a very turbulent period and is entering a relatively calm point. The wind is behind our backs now, not a gale in our face."

Fox oversaw the sales of Waterstones, the Hammersmith Apollo and persuaded the banks to waive covenants on £180 million of net debt. He also secured a deal with key music and film suppliers in return for small equity stakes.

When he left, Fox predicted that HMV was on track to make a profit of at least £10m in 2012-13 and halve debt within the next three years.

In September 2012, he was appointed as the new chief executive for the Trinity Mirror Group - a publisher which had seen its share price fall 90% under predecessor Sly Bailey. Since his arrival, he has pledged his support for the future of journalism, but took a sideswipe at Bailey's "scattergun approach to digital", merged the national and regional operations under a One Trinity Mirror band and started the process of trying to woo back advertisers.

Third time lucky?

But will Trinity be third time lucky for this ambitious CEO? Or should lessons have been learned at HMV and Comet? And what next for Moore? Analysts seem to feel the blame for the retailers' failure doesn't lie solely at the management's door.

Richard Perks, retail director at Mintel, told the Huffington Post UK: "I wouldn't necessarily blame (Fox)... I see the failure of Comet down to lack of investment by Kesa. HMV failed for three main reasons - change in the way recorded music is delivered, competition from the likes of Amazon who can hold a vast stock in one place rather than having to duplicate it, and competition from the supermarkets that cream the market.

"To that you can add a declining music market and a failure to develop new earnings streams to offset the declining core. But that's a huge ask of any board, so Fox tried and failed. To his credit, HMV lasted longer than most thought it would."

Nick Hood, business analyst at Company Watch, agreed, describing Fox's career path as "moving seamlessly through a succession of business frying pans into the fire of another rapidly evolving market at Trinity Mirror".

"Turnaround skills are a rare commodity and not easily practised in the full glare of the media attention inevitable at Comet and HMV. Getting it right usually needs a stakeholder fan club, some decent middle management with new ideas and maximum flexibility, plus a huge dollop of good luck," he said.

"All of these companies share two common problems: relentless technological change on the one hand and ruthless, powerful competitors on the other. Let's hope Fox can finally nail a successful transition from market laggard to sector leader at Trinity Mirror."

And Clive Black, retail analyst at Shore Capital, explained that good management "will always be beaten by a bad market".

"What Comet and HMV did not do was foresee change quickly enough and act upon. Arguably, they did have time to build online capabilities to compete... but they didn't. So, Amazon et al were the mechanism for retail Darwinism."

Stockbrokers Redmayne Bentley agreed - analyst Lauren Charnley told HuffPost UK that while certain sectors will be more affected than others, in the face of a failing company it was a common theme to see directors making a swift
exit.

"It can often be seen as a positive step when a company brings in new management or announces an overhaul plan to revitalise the business. The move to online is likely to have been an issue for HMV, Comet and Trinity Mirror... The traditionalist act of going to purchase a newspaper is certainly slowing, with many media giants improving their online offering. It is clear that unless companies are willing to make the move to online, it could be at their own peril."

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