HMV's future seen as handful of stores and website

By Neil Maidment and James Davey

LONDON (Reuters) - HMV, the 92-year-old British music retailer seeking protection from creditors, is unlikely to have much of a future beyond a rump of stores and the internet, if other recent retail failures are any guide.

After years of struggling as its business of selling CDs and DVDs was hammered by competition from supermarkets like Tesco, online retailers like Amazon and download sites like Apple's iTunes, Deloitte was appointed administrator on Tuesday to try to salvage some of its 223 British stores.

Hilco, the restructuring specialist that purchased HMV Canada in 2011, was watching the situation closely, given possible synergies, a source close to the matter said.

Media reports also named private equity firms Endless and Better Capital as possible suitors. Both firms could not be immediately reached for comment.

HMV's administration, which puts 4,123 jobs at risk, is the latest blow to an industry which has seen a string of household names like Woolworths, MFI, JJB Sports and Comet fall by the wayside in a prolonged consumer downturn.

Craig Amer, analyst at market researcher Kantar Worldpanel, said if HMV were to close completely Britain's entertainment market would lose 300 million pounds ($483 million).

"Some shoppers will simply move to other retailers but the value generated from browsing and buying on impulse will be lost," he said.

HMV, known for its Nipper the Dog trademark, will continue to trade while a purchaser is sought. Underlying sales had plunged about 10 percent year-on-year at Christmas.