U.K.-based music retail store HMV has appointed an administrator, amid falling sales and a tumbling share price, the company said in a statement today.
Updated at 4:55 p.m. ET: The statement read: "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."
The music retailer also confirmed that its ordinary shares "will be suspended from trading on the London Stock Exchange with immediate effect," slightly more than a decade since it floated its initial public offering in 2002.
ITV News business editor Laura Kuenssberg broke the news earlier today. The music retailer has 239 stores and 4,350 employees across the U.K., Singapore, and Hong Kong. It's reported that Deloitte will appointed administrators for the ailing firm, though it's not clear whether or not any of the stores can be saved.
It comes on the same day that private equity firm Apollo Global Management reportedly said that it was not planning a takeover of HMV Group, despite buying some struggling British retailers in recent months. HMV also has a presence in Singapore and Hong Kong.
HMV has struggled during the December quarter after music, game and DVD sales declined, and warned that a poor start to its Christmas trading could lead to it breaching its banking agreements. This would, ultimately, leave the embattled company at the hands of its lenders.
On Thursday the company said it was extending its sales by another month in a bid to stay afloat, reports sister site CNET U.K. However, HMV Group saw its shares fall more than one-fifth following the sales launch.
Last year, HMV's Michele Tan told ZDNet that the company's business "remains strong," because it had "evolved from being just a music store to one offering books, games, electronic goods, accessories and even fashion apparel." However, today's news paints the company's picture in an entirely different light.
The fact remains that company's nowadays that have failed to adapt their business models in the face of the online retail and marketplace space will suffer massive declines. The fact of the matter is that
Is HMV yet another victim of the 'iTunes evolution'? Quite possibly.
We've put in questions and requests for comment with HMV, but the duty press officer did not give a statement at this time outside U.K. business hours. Once we hear more, we'll keep you in the loop.