HMV becomes the latest casualty in the retail sector

Coming hard on the heels of the failure of Comet late last year and Jessops earlier this year, Music and DVD chain HMV, has confirmed it will appoint an administrator, making it the latest High Street casualty.

Employing approximately 4,350 staff, the 239-store chain will be run by Deloitte while it assesses prospects for the business and seeks potential buyers. Trading in HMV shares on the London Stock Exchange is being suspended, the company said in a statement.

Started in 1921, HMV became one of the biggest names on the High Street, however the company has been caught between the encroachment onto its turf of supermarket chains such as Tesco and Asda, and the explosive growth of digital specialists like Amazon which are unencumbered by hefty real estate costs.

In a statement issued 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..."

HMV has been in financial crisis for more than a year, and on 13th December, despite an apparent flurry of customers in the company's branch in Exeter's Princesshay, warned that due to poor sales it faced a possible breach of bank loan agreements, which sent its share price plummeting.

The Financial Times reported that the final straw came over the past few days when suppliers, including music labels and film companies, declined to offer HMV any assistance with funding so that it could continue trading.

HMV has confirmed that "The Directors of the Company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business."

The announcement will no doubt come as a hard blow to the fragile retail sector, not least of all the thousands of staff whose jobs are today in jeopardy. It also remains to be seen what impact this will have on the film companies and record labels that rely on its 247 stores for their sales.

Despite its troubled position, the retailer still sells 27% of all DVDs and Blu-Ray discs and 38% of the physical music market. HMV's website was still advertising its 25% off sale for thousands of products on Monday.