More than 3,700 jobs are at risk after three retailers called in the administrators yesterday.

Music Zone, Greeting Card Group, and H Plumb & Son, an electricals chain based in Wigan, all appointed administrators in the face of rising costs and poor sales growth.

Music Zone, the UK’s third-largest music and film retailer with 104 stores and 1,100 staff, appointed Bill Dawson, of Deloitte’s Reorganisation Services, as administrator after its bank refused to renew credit facilities in the wake of a difficult festive season.

Meanwhile, 2,500 jobs were at risk as Greeting Card Group, a retailer with 470 stores trading under the names Cardfair and Card Warehouse, appointed Michael Jervis and Nick Cropper of PricewaterhouseCoopers as administrators.

Plumb, which has ten stores, appointed Dermot Power and David Swaydon at BDO Stoy Hayward as joint administrators. Plumb, which employs 100 staff, immediately closed eight of its stores, making 76 people redundant.

Mr Dawson said that Music Zone’s banks had refused to renew its credit facilities, which came up for renegotiation just before Christmas, because of fears about the state of the entertainment market.

A spokesperson for Music Zone, which is part-owned by Lloyds Development Capital, said: “The decision by our bankers to recover debts and withdraw credit facilities left us and our backers with no real alternative other than to appoint administrators.”

HMV Group and Woolworths, the high street retailers, issued profits warnings before Christmas, saying that they had been hit by heavy price competition from the supermarkets and online rivals.

Mr Dawson said: “There is a structural issue with internet downloads, which are taking a percentage of the market, but the biggest issue is price-cutting and competition from the supermarkets.”

Music Zone, which bought 41 MVC stores a year ago after the rival chain called in administrators, had debts of £28 million to £30 million when the administrators were called in, with only £1.5 million owed to its banks. However, this was at the height of the trading season, and the retailer needed to secure facilities of about £15 million to fund it over the summer when entertainment sales are much slower. In the year to May, the company was expected to make a small loss on sales of £115 million. Mr Dawson said that he was intending to sell the business as a going concern.

Mr Jervis, of PwC, was also hopeful of securing a sale of Greeting Card Group as a going concern. The card retailer, which went into administration with debts of about £30 million, achieved a slight rise in underlying sales ahead of Christmas but was hindered by a large number of loss-making stores.

About one third of the company’s store portfolio is understood to have been loss-making and it is believed that the administrator will have to close a number of outlets.

Mr Jervis said: “It is a competitive industry and footfall on the high street was a factor in December. If shoppers aren’t out there treading the pavements they are not going to buy as many Christmas cards.”

Meanwhile, shares in Clinton Cards slipped more than 2 per cent yesterday to close at 60¼p on fears of a tough Christmas at the retailer.

On the cards

2,500 jobs at risk at Greeting Card

1,100 jobs under threat at Music Zone

76 jobs already lost at Plumb

2% fall in share price at Clinton Cards

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