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HMV: Debt-laden retailer may appoint administrator HMV: Debt-laden retailer to appoint administrator
(35 minutes later)
HMV, the music and DVD retailer employing about 4,350 staff, may appoint an administrator, becoming the latest High Street casualty. Music and DVD chain HMV, which employs about 4,350 staff, has confirmed it will appoint an administrator, making it the latest High Street casualty.
Deloitte was being lined up to run the 239-store chain following a meeting of the HMV board on Monday evening, the BBC understands. Deloitte will run the 239-store chain while it assesses prospects for the business and seeks potential buyers.
A formal announcement is expected later. Trading in HMV shares on the London Stock Exchange are being suspended, the company said in a statement.
HMV has been in crisis for months, and in December warned it faced a possible breach of bank loan agreements. Started in 1921, HMV became one of the biggest names on the High Street, but has struggled against online retailing.
The retailer has faced intense competition from the boom in buying music and DVDs online. The company has been in financial crisis for many months and on 13 December warned that it faced a possible breach of bank loan agreements.
Last week, the company announced a month-long sale with 25% off prices, sparking worries that HMV needed to shift stock after poor Christmas trading. In a statement late on Monday the company said: "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..."
The company's troubles underline the gloom on the High Street and comes after a string of high profile failures, including Jessops' closure last week and Comet's collapse last year. The statement continued that the board "understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business".
The retailer, whose first store was opened in London's Oxford Street in 1921, has faced intense competition from online retailers, digital downloads, and supermarkets in recent years.
As its debts mounted, HMV sold off parts of the business, notably its live entertainment arm and the Waterstones book chain.
Last week, HMV announced a month-long sale with 25% off prices, sparking worries that the company needed to shift stock after poor Christmas trading.
The company's troubles underline the gloom on the High Street and come after a string of high-profile failures, including the closure last week of camera retailer Jessops and Comet's collapse last year.
Neil Saunders, the managing director of retail analyst firm Conlumino, said he felt the appointment of administrators at HMV "was always inevitable".
He said: "While many failures of recent times have been, at least in part, driven by the economy, HMV's reported demise is a structural failure.
"In the digital era where 73.4% of music and film are downloaded, HMV's business model has simply become increasingly irrelevant and unsustainable.
"Coming hard on the heels of the failure of Comet and Jessops this latest potential administration demonstrates the significant pressure on retailers, many of which are contending with a consumer downturn alongside structural shifts in the sector."
He said that although the HMV brand "certainly has some value" for potential buyers, the current business model was dead. "The bottom line is that there is no real future for physical retail in the music sector," he said.