HMV calls in administrators
HMV could be on the verge of calling in the administrators, as the directors address the future of the high street music and movie shop.
Following the closure of Jessops last week, it looks like the high street could see another closure: HMV
Sky News is reporting that the HMV board is examining options for the company's future, which includes moving into administration to try to save the flagging retailer. It's thought that a restructuring could save HMV, with a move to fewer, smaller stores.
In recent times, HMV has raised cash by selling assets, including the Hammersmith Apollo venue and Waterstones bookseller, however the future still looks bleak as it's widely suspected that Christmas sales fell short, having issued a warning that it might breach bank loan agreements in December.
HMV has struggled to compete with strong online competition from the likes of Amazon as well as growing CD and DVD sales through supermarkets.
Sky News reports that a decision is expect on Monday or Tuesday as to the future of the company.
HMV, which is an abbreviation of His Master's Voice, has 230 stores in the UK and employs over 4000 staff members. The first store was opened by Sir Edward Elgar in 1921 on Oxford Street, London.
UPDATE 14/01/13 22:15 GMT That was quick, the company has gone in to administration issuing the following statement to Music Week:
"On 13 December 2012, [HMV] announced that as a result of current market trading conditions, the Company faced material uncertainties and that it was probable that the Group would not comply with its banking covenants at the end of January 2013. The Company also stated that it was in discussions with its banks.
"Since that date, the Company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach. 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 and certain of its subsidiaries with immediate effect.
"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.
"It is proposed that Nick Edwards, Neville Kahn and Rob Harding, partners of Deloitte LLP, will be appointed as the administrators of the Company and certain of its subsidiaries.
"The Company's ordinary shares will be suspended from trading on the London Stock Exchange with immediate effect."
It is not as yet known what will happen to the 230 stores.