LONDON (Reuters) - Music and DVD retailer HMV said it was calling in the administrators after a last-ditch attempt to secure funding failed, bringing the curtain down on one of Britain’s best-known high street retail stores.
The accounting firm Deloitte has been named as the administrator and intends to keep the business running while it seeks a potential buyer, HMV said in a statement late on Monday.
The company, which still has 239 stores in the UK and Ireland with around 4,350 staff, has struggled amid declining music, DVD and games markets.
In December, it warned that a breach of its banking agreements was likely and it had been in talks with its banks to remedy the breach, it said on Monday.
“However, the board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the company,” HMV said.
The company’s chief executive is Trevor Moore, who joined HMV last year from camera specialist Jessops, which last week also went into administration.
The economic downturn and tough government austerity measures have hit consumer spending and confidence in Britain, and a string of once well-known retail names has disappeared in recent years.
Opened on London’s Oxford Street by English composer Edward Elgar in 1921, HMV, famous for its ‘Nipper the dog’ trademark, grew to become a musical powerhouse, selling records and albums to generations.
The firm had a hand in the Beatles’ big break 40 years later, recommending the group’s demo record to publishers. It underlined its status as an industry figure by opening the world’s biggest music entertainment store in London in 1984.
The 1990’s signaled major expansion as HMV opened abroad and branched into books and then live music venues and festivals.
In 2006, it even rejected a private equity takeover bid valued at 847 million pounds, before the rise of online and digital music - and its failure to adapt quickly enough - spelled the beginning of its struggles.
A rapid fall in the sales of physical CDs has seen rivals like Zavvi go bust or others like WH Smith exit the market.
With DVD and games demand also in decline, HMV belatedly tried to shift its focus toward technology products like tablet PCs and headphones, but it faced tough competition to prise sales away from online firms like Amazon at a time when pressured consumers are eager to save money.
The support of suppliers - music labels, games manufacturers and others who look to HMV as one of the last bastions of entertainment content on the high street - has been crucial.
As its debt rose - underlying net debt stood at 176 million pounds at its half year to October 27 - the company sold off much of its live entertainment business. It had disposed of the book chain Waterstones in 2011.
HMV had been pinning its hopes on a late Christmas surge in sales, but it sparked worries last week that such a surge had not materialized when it launched a month-long sale on some products, sending its shares to an all-time low.
HMV shares closed down 8.3 percent to just above a penny a share on Monday, valuing the company at around 5 million pounds. Its shares will be suspended ahead of Tuesday’s open.
Editing by Leslie Adler, G Crosse