BLOCKBUSTER, the DVD, video and games rental chain, yesterday collapsed into administration sending Britain’s high street into further turmoil.
Deloitte, which has been hired as administrators, said Blockbuster would continue to trade as it seeks a buyer for all or parts of the business.
However, it is inevitable that some of Blockbuster’s vast 528-store estate will close. The chain, which is based in Uxbridge, employs 4,190 staff.
Lee Manning, Deloitte joint administrator said: “We are working closely with suppliers and employees to ensure the business has the best possible platform to secure a sale, preserve jobs and generate as much value as possible for all creditors.”
The beleaguered chain was forced to call in administrators after losses widened from £8.5m in 2011 to £11.2m last year.
Blockbuster had anticipated last quarter earnings before interest, tax, depreciation and amortisation to be about £4.5m. However, it made a £30,000 loss.
Manning said Blockbuster has faced increased competition from internet based rental companies along with the shift to digital streaming of movies and games.
He said trading had further deteriorated during the crucial Christmas quarter, in part due to people opting to watch major releases like Skyfall at the cinema rather than renting films.
Unlike HMV, Blockbuster said it will honour all outstanding gift cards and credit, which amount to around £400,000. Manning said the company had chosen to do this because unlike other retailers Blockbuster has account holders and therefore “has a distinct relationship with its customers”.
A spokesperson for Deloitte said Blockbuster’s core business – some 200 stores – remain profitable. These are mostly in rural areas where there is a slightly older population and internet connections are slower.
Blockbuster is owned by its US parent company, which in turn was bought out of bankruptcy in 2011 by US satellite television company, Dish Network.
The chain is the latest in a spate of casualties on the high street over the last two months, with Comet, Jessops and HMV all going into administration, putting nearly 15,000 jobs at risk.
HMV, which called in Deloitte as administrators on Tuesday, closed its 16 Irish stores yesterday, which together employ around 300 staff.
Mobile phone operator EE also said it would close 78 stores. The Orange and T-Mobile owner told staff last year’s rebranding resulted in duplicate EE shops, and that all front line employees would be retained.