HMV to close final US store: CEO Giles blames series of poor real estate deals for failure in the States.(News)

HMV's American dream will be finally confined to history this weekend as the door closes for the last time on New York's Fifth Avenue on its last remaining US store.

But group CEO Alan Giles says he will not be shedding any tears as HMV follows in the footsteps of other UK retailing institutions such as Marks & Spencer and WH Smith by completely turning its back on the US market. "In some ways we're relieved," concedes Giles, who acknowledges HMV's bid to repeat its success in the UK across the Atlantic was flawed from the very beginning by sky-high rental costs and poor decisions on where to open stores.

"In our case it's about the fact we had very poor real estate deals where the majority of the stores we had were either poorly located or over-rented and that always gave us a mountain to climb," he says.

When HMV made its first steps into the US in November 1990 with the launch of two superstores in New York, costing in the region of $5.6m each, it came in with all guns blazing as the self-styled music retailing expert. This was despite the long-time presence of US superstore Tower Records whose chairman Russ Solomon at the time questioned why one of his major suppliers--HMV was owned by Thorn EMI at the time--should decide to compete with one of its main customers.

By the late Nineties HMV had extended its US portfolio to 15 stores, but Giles, who inherited the situation when he initially became joint group CEO in 1998, concedes there was a "level of naivete" in terms of the deals the group signed up to and a wrong approach in where to open stores. Rather than try to a pursue a "cluster strategy" of establishing presences in specific areas, HMV instead spread its offer too thinly, making an ultimate US withdrawal "inevitable", according to Giles.

"The US market is very competitive and what some UK retailers misunderstood is the fact it is highly ...