The demise of what was once thought of as an up-and-coming business with a distinct brand is symptomatic of the huge evolution and price deflation in music and book retailing.
Its acquisition of Music Zone in February, which added more than 60 stores to its 33 shops in one fell swoop, shocked the retail industry. This is thought to have led to cash-flow difficulties and on top of falling CD sales and intense competition from e-tailers and the supermarkets, the business has buckled.
Fox's fresh ideas for HMV
Yesterday, HMV provided more evidence of just how tough it is to be a music retailer. It revealed that its pre-tax profits had slumped by half to£48.1 million for the year to April 28.
However, there were some positive noises, with its like-for-like sales up 3.8 per cent, albeit against very weak comparatives. Chief executive Simon Fox said that his three-year recovery plan was on track and he was particularly upbeat about a new digital download contract that will enable HMV to sell downloads that can be played on Apple's iPod as well as other digital music players. Competing with Apple's iTunes site will not be easy and Fox is banking on driving additional traffic through a new social networking site he is developing. Striking the right balance between commercial and cool will be crucial to whether HMV can pull this off.
Fox's other cunning plan is to drive sales of electricals through HMV's high street stores to make up for falling CD sales. Although this has got off to a promising start it smacks a bit of out of the frying pan and into the fire. The electricals sector itself is just as cut-throat and is facing many of the same problems as HMV - battling with the supermarkets and online retailers.
As for Waterstone's, trade remains as tough as ever and the Harry Potter price wars mean that margin will remain broadly flat for the year. Ironically though, children's books are one of the only areas of sales growth in the book market.
Worrying times at Mosaic
This morning's Q1 update from Mosaic Fashions illustrates just how tough fashion sales are at the moment. Chief executive Derek Lovelock's comment that sales have slowed at the core business Oasis are worrying and new competition to Coast also undermines one of Mosaic's best growth stories. While some of this performance might be down to short-term glitches following the merger of Mosaic and Rubicon Retail at the end of last year, slowing sales are also symptomatic of the difficult fashion trends and unseasonable weather that has run through the course of the spring season. The sea of red and white Sale banners, which I believe to be out at least a week earlier than last year, is a sure sign that others are feeling the pinch.
All this bad news can't be helping the sale of New Look and Marks & Spencer's first quarter update on July 10 should be interesting.