The group, which trades from around 130 stores and employs more than 2,200 staff, is set to appoint administrators amid a cash crisis.
It will be the second time HMV has collapsed in recent years, having filed for administration in 2013 after which it was acquired by its current owner, Hilco.
Yesterday Hilco blamed a “tsunami” of retail challenges, including business rate levels and the move to digital.
In addition to high business rates and the rise of online streaming services, weak consumer confidence took its toll on HMV.
Paul McGowan, executive chairman of HMV and Hilco, said: “During the key Christmas trading period the market for DVD fell by over 30 per cent compared to the previous year and, whilst HMV performed considerably better than that, such a deterioration in a key sector of the market is unsustainable.
“HMV has clearly not been insulated from the general malaise of the UK high street and has suffered the same challenges with business rates and other government-centric policies which have led to increased fixed costs in the busiess.
“Business rates alone represent an annual cost to HMV in excess of £15 million.
“Even an exceptionally well-run and much-loved business such as HMV cannot withstand the tsunami of challenges facing UK retailers over the last 12 months on top of such a dramatic change in consumer behaviour in the entertainment market.”
The failure of another major high street name before the year is up caps a miserable 12 months for the retail sector.
Well-known names, such as Poundworld, Toys’R’Us and Maplin have all gone bust this year, while heavyweights Marks & Spencer and Debenhams have announced plans to close hundreds of their stores.
Several others – including Superdry, Carpetright and Card Factory – have all issued profit warnings.
High street retailers have been slashing prices after brutal trading in November and early December failed to lure shoppers to stores.
Traditional retailers have been battling the rise of online shopping, higher costs and low consumer confidence as shoppers rein in spending amid Brexit uncertainty.
Hilco also owns Homebase, which has also been forced to close dozens of stores this year.
Richard Lim, chief executive at Retail Economics, said: “Set against the backdrop of turbulent political and economic undercurrents, this perfect storm of pressures has intensified into a year of distress for the industry.
“While it is too early to assess the relative success of Christmas trading, it’s clear that consumer confidence is fragile and shoppers’ propensity to spend is weak,” Mr Lim added.