Fopp, one of the country's biggest music retailers, was today readying to appoint Ernst & Young as administrator after telling some staff that they would not receive their pay packet tomorrow.

The store had already stopped taking credit card transactions and halted online sales in the past few days as it talks with its bank.

One member of staff told Times Online today that he had been told his store would not open tomorrow and that staff would not receive their monthly pay packet, due tomorrow.

But this afternoon no one was immediately available to answer calls or confirm that the stores are due to close tomorrow.

The company closed 50 stores on Friday, including its flagship one on London's Tottenham Court Road, for a special stock check, just a week after it told publishers to halt book supplies on both new orders and range replenishments.

The chairman and major shareholder Gordon Montgomery, who founded the chain from a market stall in Glasgow in the early 1980s, admitted at the weekend that sales were falling. "We are experiencing difficulties. However, I can categorically state we will not go into administration."

In a statement released at the weekend, the company said: "Fopp continues genuine and lengthy negotiations with its bank, and is not in administration. Stock taking is now complete, stores re-opened on Saturday 23rd and will continue to remain open."

A notice on Fopp's website today states "Due to circumstances beyond our control we cannot currently take orders online. Sorry for any inconvenience caused."

In a probable sign of growing pressure from Fopp's bank, store staff reported that they are also unable to take card payments in the store and that all sales must be cash only.

One said today: "I'm sorry we don't accept cards any more across all the stores, due to a problem with our system."

It is thought Fopp's acquisition of 67 stores from the administrator of failed rival Music Zone in February may have put pressure on the company's cash flow.

But all specialist retailers of CDs and DVDs have been hit by growing competition from online downloads and supermarkets. HMV today reported a 70 per cent fall in profits. Music Zone's demise was blamed on the same factors.

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