LONDON - Iconic British music retailer HMV was fighting for its survival on Tuesday after the group looked to the Deloitte financial group to help save it from a collapse which could see the loss of more than 4,000 jobs.
The 92-year-old institution employs about 4,350 staff, but has struggled to meet the challenge of online retailing and digital downloading and has been teetering on the brink for many months.
Britain's economy in general is meanwhile struggling badly, with a triple-dip recession possibly on the horizon, contributing to the recent collapse of photography chain Jessops and electrical goods group Comet.
HMV Group announced late on Monday in London that it was entering administration, a process whereby a troubled company calls upon independent expert financial help in an attempt to remain operational.
It has also suspended trading of its shares.
"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," HMV said in a statement.
"It is proposed that Nick Edwards, Neville Kahn and Rob Harding, partners of Deloitte LLP, will be appointed as the administrators."
In December, the company had announced that it was in danger of breaching bank loan arrangements.
"Since that date, the company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach," it said Tuesday.
"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."
The last major music retailer on the British high-street has huge debts and last month reported sales down 13.5 per cent, leading to a crash in the share price that left the company valued at just over £5 million (six million euros, US$8 million).
It was valued at almost £850 million in 2006, since which time it has offloaded British bookstore chain Waterstones amid the increasingly popularity of downloadable books.
HMV, which operates out of 239 stores in Britain and Ireland, launched a huge, month-long sale on Saturday offering 25 per cent off a huge range of products to boost sales, but even that was not enough to keep the administrators at bay.
"The problem they have is their core product categories are disappearing, and that's a very hard thing to fight," analyst Kate Calvert of Seymour Pierce brokers said of HMV, which also has eight stores in Hong Kong and Singapore.
The first HMV store opened on London's Oxford Street in 1921 under the ownership of the Gramophone Company, which endowed it with its legendary trademark, the image of a dog listening to a gramophone - His Master's Voice.
It became part of music history in 1962 when Brian Epstein cut a demo for The Beatles in the shop studio, which led to the Fab Four signing with EMI, the record label that owned HMV until 1996.