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HMV goes into Administration

High street music chain HMV has called in the administrators after months of financial uncertainty have finally come to a head.

Deloitte will take charge of the process, and if a buyer for the chain is failed to be found, there will be severe consequences for the 4,350 employees across 238 stores, who would lose their jobs.

HMV has been a UK high street name for the last 92 years, and has had years of unrivalled success when it comes to selling CD’s, DVD’s, games and other electronic goods. However fierce competition from digital online sales, particularly within the music industry, has pulled millions of consumers off the high street and onto their computers, where music is cheaper and more readily available. Competition from other websites, such as Amazon and have further eroded sales of DVD’s and games in particular, which again can be acquired for less than on the high street in most cases. This has left HMV in bank debt to the tune of £220m.

In December HMV admitted it was likely to breach banking covenants set out as part of the loan agreement, and it was this that effectively lead to the final stages of the chain’s demise. However according to HMV, the administrators intend to “continue to trade whilst they seek a purchaser for the business”, which if nothing else will buy vital time in searching for a willing investor to take control of the chain.

Last night the whole business was valued at just £4.4m after share prices fell to just 1.1p.

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