Iain Muspratt, the former chief executive, chairman and founder shareholder of ChoicesUK today, stepped down from the board of the troubled DVD rental chain along with the finance director.

Shares in the company lost another 8 per cent this afternoon, to 11.25p, having more than halved in value since a profit warning 12 days ago that raised a question mark over the future of the company.

That warning, which triggered talks with the company's banks after it said it would have to "assess its strategic and financial options" sent the stock down nearly 40 per cent to 23.5p. They reached a high of about 240p in early 2004.

"This has been coming for a while. This is a company with issues," a source close to the group said.

John Sealey, 69, the group finance has also stepped down from the board but will continue to serve as company secretary. Chris White, operations director, takes the finance post.

Mr Muspratt has had little involvement in the day-to-day running of the company for the best part of a year. Neither man will receive any pay-off.

The profit warning earlier this month flagged the dismal state of the £330 million market when it gave warning that it will “substantially” miss targets this year after a poor Easter.

Mr Muspratt, 63, who owns 27 per cent of the company, had stepped down as chairman of the group earlier this month following a long-running battle with shareholders over strategy. He gave up his position as chief executive last year.

After this month’s profits warning, Anthony Skitt, the chief executive, said that there were unlikely to be any standalone rental stores on the high street in five years’ time. He told The Times: “Clearly, standalone stores are becoming less viable. That’s as plain as the nose on your face.”

A sharp downturn over Easter, sparked by the warm weather, meant that ChoicesUK will accelerate plans to close or sell 70 loss-making or less profitable stores. This will leave the chain with 120 sites.

Mr Skitt said that even these would have to put more emphasis on computer games and confectionery to survive. “Business died a death over Easter,” he said.

Earier this year Apollo Video Film Hire, the country’s third-biggest rental chain, went into liquidation. Blockbuster, the market leader, is also understood to be considering closing 24 of its 700 UK outlets.

Britain’s video and DVD rental market has gone into meltdown over the past two years with the growth of online rentals and internet film piracy.

Supermarkets and high-street retailers such as Virgin and HMV have contributed to the decline by slashing the price of new DVDs. At its peak in the late 1980s, film fans were renting 230 million videos a year. Since 2001, the value of the market has fallen from £470 million to £330 million.

ChoicesUK was expected to accrue losses of £2.6 million in the year to June, but analysts have said that the chain was more likely to fall £4.6 million into the red.

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