The British music retailer HMV Group, which operates 230 stores, has failed to secure an additional financing of £300m from suppliers including music labels, game-makers and film companies to pay its bank debt.
The move, which is seen as another blow to the British retail market, puts 4,000 jobs at risk.
The company tried its best to strike a deal with creditors to prevent administration. Meanwhile, HMV has hired Deloitte as administrator to identify a purchaser for the company.
The company, in a statement, 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, and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect.”
Neil Saunders, managing director of retail consultancy Conlumino, told the Financial Times: “It has been a long time coming, but everyone has known that the writing was on the wall since the day someone first downloaded a digital song.”
“People will be very sad to see it go because it is a very emotionally connected brand, which most of us have used and have a lot of resonance with. But the truth is it is just not a part of our purchasing habits as much as it used to be,” Saunders added.
HMV, which closed Woolworths business in 2008, suffered by poor sales during Christmas and holiday season apart from the migration to purchasing of music and films online.
Chuka Umunna MP, Labour’s shadow business secretary, told the Financial Times: “HMV is a national institution that has been a feature of our high streets for over 90 years so this news is deeply worrying. For the sake of HMV’s employees, we hope a way can be found to keep the business going. The demise of HMV – a national institution – would be a sad loss for British retail.”
Last week, the British photographic retailer Jessops cut 1,400 jobs citing poor business performance. In 2012, JJB Sports, Clinton Cards, Game Group, Peacocks and Blacks Leisure saw failures due to weak sales.