HMV to call in administrators putting thousands of jobs at risk as UK high street turmoil continues

Music retailer facing second collapse after ‘extremely weak’ Christmas trading

HMV has become the latest UK retailer to call in administrators, putting 2,200 jobs at risk, after recording “extremely weak Christmas footfall” and further decline in the CD and DVD market.

The company is currently engaged in last-ditch talks with suppliers in the music and movie industries, but has resolved to appoint administrators from KPMG, its owner Hilco Capital confirmed on Friday.

Hilco said that the declining market for DVDs and CDs means it will not be possible for the business to continue trading.

This is the second time the company has collapsed, having gone into administration in 2013 amid rising competition from music streaming services.

The one-time high street stalwart was bought by Hilco in a £50m deal at the time, which saved 140 of its 230 stores, with 15 closing since then. However, the remaining branches now face closure as HMV is once again in need of urgent financial support to keep going.

The 125 stores left will continue to trade while negotiations with suppliers are ongoing. Administrators will also be seeking a buyer for the business as a going concern.

Paul McGowan, executive chair of both Hilco and HMV, said: “In the six years since the HMV business was rescued from a previous administration process the entire team has been immensely hardworking and engaged with the business and has captured market share from all of its competitors.

“As such, it is disappointing to see the market, particularly for DVD, deteriorate so rapidly in the last 12 months as consumers switch at an ever increasing pace to digital services.”

Mr McGowan said that while HMV had “successfully implemented systems to maintain the lowest possible cost base”, the market for DVD had dropped by 30 per cent this Christmas compared with the same period last year.

“HMV has clearly not been insulated from the general malaise of the UK high street and has suffered the same challenges with business rates and other government-centric policies which have led to increased fixed costs in the business,” he added.

“Business rates alone represent an annual cost to HMV in excess of £15m. Even an exceptionally well run and much-loved business such as HMV cannot withstand the tsunami of challenges facing UK retailers over the last 12 months on top of such a dramatic change in consumer behaviour in the entertainment market.”

The news of HMV’s difficulties comes after a year of increasing trouble on the UK’s high streets, with a number of high profile brands forced to close stores as they battle financial problems and a decline in consumer spending.

House of Fraser collapsed into administration in August and was subsequently bought by Sports Direct founder Mike Ashley, but he has been unable to save all stores.

In addition Mothercare announced earlier this year that it would close 50 stores under a CVA aimed at cutting costs, and Marks and Spencer said it would close 100 shops over the next four years.

Meanwhile, in another sign of the growing retail crisis, the number of shoppers heading to UK stores on Boxing Day fell for the third year in a row, according to the latest figures from consultancy Springboard.