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The stars call in at 363

Q4 2013

Just six months on from Hilco Capital’s acquisition

of the collapsed HMV UK business from its

administrators, a newly re-energised HMV brought

Europe’s busiest shopping street to a standstill when

legendary musician Sir Paul McCartney dropped in

to officially launch the company’s new flagship store

at 363 Oxford Street, London (pictured above).

Located on the site of the

original HMV store, which

first opened in 1921 but

closed at the turn of the

century, 363 Oxford Street

is steeped in history and

HMV’s return home formed a

fitting centrepiece to a month

of high profile launches and marketing activities

that saw HMV firmly re-established in the public

consciousness as, in the words of the brand’s new

tagline, the “home of entertainment since 1921”.

The editorial team from HMV’s slick new, content-

rich website – which went live in October – were on

hand to document the proceedings. Head to hmv.

com to read their article on the significance of the

363 Oxford Street store and to watch a short film of

the memorable day that Macca called in:

goo.gl/Vqjhqb.

In a first for HMV, 363

Oxford Street includes an

entire floor dedicated to in

store events. In the run up to

Christmas, the second floor

venue hosted an acoustic

performance by X Factor and

Take That star Gary Barlow

while comedians Steve Coogan and Karl Pilkington

came in to meet fans for DVD signing sessions. 363

will host a different live event each week through

2014 with intimate performances from You

Xtra-vision, Ireland’s largest

entertainment retailer, has

expanded its footprint with the

launch of DVD and Blu-ray movie

rental vending machines in Spar

and Eurospar stores. The initial

phase saw the company roll out

20 kiosks in stores across the

Greater Dublin area in October.

Leading Irish model Rozanna

Purcell (pictured) became the

first person to rent a DVD from

an Xtra-vision vending machine

at the media launch event.

The machines have generated

impressive sales to date with

customers clearly appreciating

the convenience of renting the

latest films without the need for

a subscription, months before

they’re available on online

streaming services. Plans are

underway to expand the vending

machine network in 2014.

Xtra-vision rolls out vending machines

2 Hilco Capital Newsletter Q4 2013 www.hilcocapital.com

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The rebuilding of HMV’s Irish

business gathered pace in the

fourth quarter with the opening

of 31 dual-branded HMV/Xtra-

vision stores in addition to a fifth

standalone HMV store. A further

15 HMV concessions will open

in Xtra-vision stores in the first

quarter of 2014.

The Wanted and John Newman

headlined a series of in-store

performances and signings,

continuing the momentum gained

in Q3 with memorable PAs by The

Strypes and Biffy Clyro.

HMV Ireland also launched

transactional websites, serving

the Republic of Ireland through the

Euro-priced hmv.ie and Northern

Ireland through a sterling-priced

site at hmvireland.co.uk. Further

work on the sites in 2014 will

see ecommerce integrated with

the content and discovery-led

direction pioneered by hmv.com

in the UK.

HMV re-establishes across Ireland

Me at Six and Within Temptation already

lined up for January and many more gigs, signings

and experiential events planned in collaboration with

HMV’s suppliers across music, film, TV, technology

and games.

Mobile Apps

October also saw HMV enter the digital music

market in the UK with the launch of innovative new

apps for Apple and Android smartphones, together

with the HMV Digital web store in the first phase of

the brand’s new digital strategy.

In a 21st century twist on the in-store listening post,

the HMV app’s Image Search functionality lets users

scan CD covers, posters or ads with their phone to

instantly access audio previews of

the tracks on the album or

single. Sound Search gives

users the option to use

their phone to identify tracks

that are playing in store, on

the radio or anywhere else

while the HMV Digital web

store provides high quality

MP3 downloads of millions of

tracks, together with the ability

to preorder forthcoming releases.

The new apps were downloaded

over 10,000 times in the first week

alone and have been registered by

the Official Chart Company so their

sales figures contribute to the UK

Top 40 singles and album charts. The

services were extended to Ireland in November and

launched in Canada, where the app is also available

on the Blackberry 10 platform, in December.

More Cool Stuff

October drew to a close with the much anticipated

UK relaunch of purehmv, HMV’s popular loyalty and

rewards programme, offering the chance to redeem

points earned on purchases at HMV for ‘cool stuff

money can’t buy’ and, for the first time, savings at

retail partners such as Top Shop.

The HMV Football Extravaganza acted as a fitting

conclusion to a monumental month of activities. The

prestigious event, which was created by HMV 17

years ago, brings together the music

industry and the world of football

to raise funds for Nordoff Robbins

and this year saw HMV’s rightful

return as headline sponsor after a

four year absence. The event saw

Pelé presented with the Legend of

Football award (pictured above).

Friday Phenomenon

In Canada, HMV celebrated a

record breaking Black Friday

in November. Footfall was

up 65% year-on-year with

the Blu Ray and technology

categories seeing 35% like

for like sales increases while gifts

& collectables and apparel were up 70% and 88%

respectively. Purehmv members accumulated over

300 million bonus points on their transactions.

The Black Friday retail concept became widespread

in the US in 2005 and started to gain traction

north of the border in 2008. Increasingly a global

phenomenon, 2010 saw Black Friday reach UK

shores via US companies Amazon, Apple and

Walmart while John Lewis took part in 2013.

www.hilcocapital.com Hilco Capital Newsletter Q4 2013 3

Newsletter

Cracking year for Denby Pottery Group

Hilco Capital appoints EU Director

Denby Pottery Group topped a vintage year off with

a very strong fourth quarter, leading to total sales

of its eponymous Denby branded product reaching

£44 million – an increase of 11% over the prior year.

Despite reports of discounting in the high street over

the Christmas period, gross margin in the business

also increased.

A year of intensive focus on export markets resulted

Erik van Heuven has joined

Hilco Capital as Business

Development Director for Europe.

A senior retail and wholesale

executive with almost 30 years’

experience, Erik’s background

includes entertainment, fashion,

hypermarket and department

store operations across Europe.

For the past ten years, Erik has been active in

in Denby’s business in Canada, the USA and South

Korea, in particular, growing at record rates to reach

£7 million and the business will enter 2014 with a

healthy order book across its product lines.

Denby subsidiary, Burleigh, which is based at the

Middleport Pottery in Burslem, also achieved record

sales after a 20% increase in business over the prior

year. This increase in business was achieved despite

some disruption to the production facilities as the

Prince’s Regeneration Trust works on the restoration

of the historic Middleport Pottery.

Poole Pottery, which is now also based at Middleport

Pottery, recorded a 6% increase in sales.

Denby Pottery Group’s products have become an

increasingly regular fixture on the small screen

this year, reflecting the resurgence in popularity

of premium quality, British-made ceramics. The

company’s Denby, Leeds Pottery and Burleigh

products regularly appear on programmes as diverse

as Paul Hollywood and Mary Berry’s respective

baking shows, BBC primetime drama Sherlock,

Coronation Street, Downton Abbey, Made in Chelsea

and Kirstie Allsopp’s Vintage Home.

Germany as a retail consultant,

COO and CEO in companies with

revenues between €300 million

– €3 billion. Erik holds a Masters

Degree in Communication

Science and an Advanced

Masters in Management.

Erik will seek opportunities to

expand Hilco Capital’s business across France,

Germany, the Netherlands, Austria and Scandinavia.

Hilco Wholesale acquires former Collectables stock

Hilco Wholesale purchased

£4 million of stock from the

administrators of Collectables,

a homeware, furniture and

gifts retailer with stores located

primarily in the North East of

England. The stock package

includes leading brands such

as Swarovski, Steiff, KitchenAid,

Myer’s beds and Yankee Candle.

Hilco’s retail team opened a short

term seasonal clearance store in

Stockton-on-Tees in November in

order to capitalise on Christmas

trade in the heartland of the

previous Collectables business.

The store, on the site of the

largest of the old Collectables

stores, trades under the name

House&Home.

Hilco Wholesale will sell the

remaining stock directly to its

retail customer base, including

many well known names in

ecommerce.

4 Hilco Capital Newsletter Q4 2013 www.hilcocapital.com

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Published by Hilco Capital Limited, 80 New Bond Street, London W1S 1SB · Tel (0) 207 317 2050 · Fax (0) 207 317 2051 · © 2014 Hilco Capital Limited · All rights reserved © 2014 Hilco Capital Limited · All rights reserved

NEWSFROM

ACROSSTHE POND

Hilco Merchant Resources was appointed to manage another major Blockbuster disposition as owner Dish Network cleared the inventory in its 316 remaining stores in order to switch to a purely digital business model.

Hilco Streambank completed its latest premium domain name auctions with the sale of desirable web addresses including DL.com, bargain.com and 800.com. The company has also been appointed to sell the non-core IP assets of Aeris Therapeutics, an early stage medical technology company.

Hilco Real Estate has been retained as real estate advisor by F&H Acquisition Corp. as the company goes through a bankruptcy process. F&H is the principal owner of casual dining restaurant chains including Fox & Hound, Bailey’s Sports Grille and Champps, comprising over 100 restaurants across 27 states.

A special Miss America episode of Cupcake Wars aired on the Food Network in November as part of Hilco Brands’ ongoing work to revitalise the Miss America brand and raise awareness of its work as the world’s largest provider of scholarship assistance to young women.

Hilco Industrial announced the sale of the largest industrial machining facility to come to market in December. The DMR Produktionsgesellschaft facility in Rostock, Germany includes 36 extremely large state-of-the-art CNC systems.

Successful 2013 sees Kraus on a roll

Debenhams expands Twice2much remit

Record year for George & Freddie

Building on the success of several

ongoing projects for Debenhams,

Twice2much has been appointed

to conduct a review of revenue

receivable from the department

store chain’s concessions.

Q4 also saw Twice2much win

new clients including sportswear

retailer Footlocker Europe which

signed up for service charges

and telecoms reviews.

Flooring manufacturer and distributor Kraus Group

enjoyed a successful end to an extremely busy

year that saw the business return to growth and

profitability. Major initiatives completed in 2013

included the recruitment and appointment of a new

business leadership team, securing a new financial

package for the company and a progressive cost

reduction and quality improvement programme.

The latter half of 2013 saw Kraus consistently

achieve year-on-year sales growth, culminating in

a 20% increase sales in December – traditionally

a slow month for flooring sales. Highlights included

sales at Canada’s Carpet One convention hitting

20 times 2012 sales and over 187 new display

placements being achieved with dealers across the

country in the last two months of the year.

In the USA market, one of the world’s largest

retailers completed a full range review and added

a further 15 new styles to the 11 already stocked.

These new styles will be launch in May 2014. Two

other key US customers, ProSource and Flooring

America, confirmed that a further nine styles will be

added to their range in 2014.

To further improve customer service levels on

smaller carpet orders, the company invested in a

new dyeing facility which went live in December. The

new equipment gives Kraus the capability to rapidly

produce smaller orders more quickly and efficiently.

Retailer George & Freddie,

which trades primarily through

the Amazon, eBay and Play

marketplaces and public

auctions, ended the year with

a strong sales performance as

group turnover grew by 90%

year-on-year. The performance

was driven in part by the launch

of the second auction site which

has now opened in Liverpool and

is currently holding two sales a

week.

The company is in the process of

developing its own transactional

website which is due to launch in

the first quarter of 2014. Head to

www.georgeandfreddie.com

for more details.