The HMV Group will close 60 of its HMV stores across the UK following a challenging holiday season at retail which saw sales drop 13 percent compared to the same period last year.
The music, DVD, games and books retailer blamed severe weather conditions across the country in the run-up to Christmas for its weak performance, adding that the fundamental market for entertainment is weak.
HMV has struggled in the face of increased competition from internet retailers such as Amazon and Play.com as well as British supermarket chains such as Tesco, which are able to sell video games at a lower cost, sometimes even pricing highly-anticipated titles at a loss in order to entice people into the stores to buy other products.
Video games account for 19 percent of HMV's business, while DVDs make up 34 percent, books 25 percent and music 22 percent. In 2009 the company described games and technology
as a "key growth category" for the fiscal year.
"Whilst HMV has had a challenging year to date, it remains a profitable and cash-generative business and a powerful entertainment brand," said CEO Simon Fox. "The pace of change in the markets in which we operate underlines the urgency with which we must continue to transform this business."
Shares in the HMV Group fell 19 percent this morning following the announcement.