Shop staff at the Wanaka store were left surprised on Monday when Play it Again management arrived to announce the franchise's immediate closure.
Wanaka Beats 107.3 DJs had to pull the plug on their broadcast and have had to relocate from the Pembroke Mall premises.
However, the radio station came back on air later in the day.
Play It Again records spokesman Jerry Lloyd said he had been brought in as a consultant to help co-manage the music store business.
The owners of Play It Again - the business has a Queenstown store in the O'Connells Centre mall on Beach St - had decided to close the Wanaka CD and music retail outlet because it had become financially unviable, Mr Lloyd said.
"Simply put, it isn't viable to have a store there under the current structure," he said.
A full-time manager and two part-time staff had been made redundant, while a "floater" employee was also out of work, Mr Lloyd said.
Rental prices at the Pembroke Mall were not a factor in the decision to close the store, which "could still be run by an independent owner-operator", Mr Lloyd said.
Former Wanaka Play It Again manager Glen Murray said the store's closure was a "big shock" and "very sad" for Wanaka's music-buying fraternity.
However, the closure was indicative of a downturn affecting music stores everywhere, Mr Murray said.
Play it Again records was opened by businesswoman Sam Hudson in May 2006.
Ms Hudson is a Wanaka DJ who also runs the independent radio station Wanaka Beats.
She could not be contacted by the Otago Daily Times yesterday as to the future of the underground music station.
Play It Again Wanaka was to be a ticketing outlet for forthcoming music concerts in the Queenstown Lakes area this summer.
The closure of the Wanaka store would not affect any existing agreements with concert promoters, but local residents would have to purchase tickets from alternative outlets, Mr Lloyd said.
