HMV to Appoint Administrators

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Trading in HMV stock suspended on the London Stock Exchange ahead of HMV Group appointing administrators.

Troubled UK retailer entertainment HMV (LSE:HMV) has announced it will appoint administrators Deloitte after being “unable to reach a position where it feels able to continue to trade outside of insolvency protection”.

In recent days suppliers, including major music labels and film companies, had declined to help the company secure the funding necessary to remain open.

Before trading was suspended on Wednesday morning HMV Group stock fell by 8.3% after details emerged that investor, Apollo Global Management LLC, would remain passive after it has acquired a stake in the group’s bank debt.

In its 2012 Annual Report HMV admitted that the year had been “challenging” but argued that “a number of important hurdles” has been surmounted, noting that they looked “forward to improved profitability in the year ahead” after a fall in sales to £923.2m from £1,1491.m in 2011, leading to a total loss before tax of £16.2m after reporting a profit of £17.6m the year before.

The former high street giant has seen a substantial fall in revenue in recent years following increased competition from online retailers, including Amazon. The news of HMV appointing administrators comes only days after Play.com, an online rival to HMV and Amazon, announced it was also closing its retail operation.

Following the closure of camera retailer Jessops HMV is the second high street brand to enter administration in less than a week. HMV Chief executive Trevor Moore left Jessops in 2012.

Founded in 1921 HMV is the last major entrainment retailer on UK high streets following the closure of Zaavi, Tower Records and Woolworths. Its 230 remaining stores will remain open whilst a buyer is sought, with the future of the group’s 4,350 staff uncertain.

In 2012 the chain aimed to stem the flow of losses by closing a large number of UK stores, including large flagship stores in major cities including Birmingham. Last week it announced a 25% sale following poor Christmas sales to try and boost retail revenue.

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