HMV has officially entered administration following the revelation of “extremely weak” trading throughout the Christmas period.
KPMG was called in to handle the administration process by HMV’s owner Hilco Capital on Friday evening, following a hearing before a High Court judge on Friday evening.
The retailers collapse, which has been attributed to a number of factors including a rapidly changing physical media market, business rates and waning consumer confidence, has plunged around 2200 jobs across 125 stores into danger.
“Whilst we understand that it has continued to outperform the overall market decline in physical music and visual sales, as well as growing a profitable ecommerce business, the company has suffered from the ongoing wave of digital disruption sweeping across the entertainment industry,” KPMG’s partner and joint administrator Will Wright said.
“Over the coming weeks, we will endeavour to continue to operate all stores as a going concern while we assess options for the business, including a possible sale.
“Customers with gift cards are advised that the cards will be honoured as usual, while the business continues to trade.”
Physical sales of DVDs and CDs, which account for a large portion of HMV’s overall income, are predicted to fall by 17 per cent next year, following a dramatic decline in recent years due to the rising prominence of streaming services.
HMV’s executive chairman Paul McGowan told the BBC: “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.”
Numerous potential buyers have been speculated since the announcement, including its owner Hilco which purchased the retailer out of administration in 2013 and remains the company’s largest creditor.
According to the Sunday Times Hilco has lent HMV £56.6 million in working capital during its ownership, alongside a further £4.5 million over the last few months which Hilco says it is “highly unlikely” to recover in full.
Other potential buyers include members of the music and entertainment industry, including Universal Records.
Music journalist Pete Paphides tweeted: “Given what a colossal stake Universal has in the entertainment industry, I’m surprised it’s has shown no apparent interest in taking over HMV.
“Statistically there’s a fair chance that any CD or LP you buy in a HMV will be a Universal product – and most of these will be impulse buys that would never have happened through browsing online.
“And even planned purchases – why not have a place where people can buy them without forcing them to go to Amazon?
“In buying out HMV, Universal would be, at the very least, ring-fencing their place in the market.”