(Corrects jobless rate to close to a 15-year high, from 13-year high in second paragraph)
* Plan is first step towards court-ordered restructuring
* Retail chain employs 1,000 staff in France
* The latest sign of industry woes
By Dominique Vidalon and Noëlle Mennella
PARIS, Jan 4 (Reuters) - Books-to-music retailer Virgin Megastore's French operation plans to declare itself insolvent next week, the latest victim of an industry-wide slump in CD and DVD sales as consumers download more film and music online.
The plan comes as high street woes intensify in the euro zone's second-biggest economy, where the jobless rate is close to a 15-year high and where shoppers are reining in spending.
Virgin Megastore France, which employs 1,000 people, will unveil a plan to file for payments suspension at a meeting of staff representatives on Jan. 7, a company spokeswoman said on Friday.
The French division has been in the red throughout the past four years and piled up an estimated debt of 22 million euros ($28.8 million).
Filing to suspend payments is the first step towards a court-ordered company restructuring in France.
Virgin France, which is no longer in the hands of billionaire founder Richard Branson, is not the only music retailer suffering from the industry slump.
Its chief domestic rival, Fnac, is being spun off by parent group PPR and has sold its Italian businesses.
In Britain, HMV last month said that it had "12 critical days" to pull in Christmas sales and help to avoid a likely breach of its banking agreements at the end of January.
Virgin France is currently owned by private equity firm Butler Capital Partners, which bought a majority stake in 2007 from French media-to-aerospace group Lagardere, which had bought the chain from Branson in 2001.
The group, which operates 26 Virgin-branded stores in France, including a flagship operation on the Champs-Elysees in Paris, generates sales of nearly 300 million euros.
High rental costs in high-profile locations in city centres and falling CD and DVD sales amid competition from rising film and music downloads, as well as a recent drop in book sales, were mostly to blame for the group's financial problems, the spokeswoman said.
Workers at the Champs-Elysees store, which opened in 1988, went on strike on Dec. 29 to protest against plans by management to terminate the lease at the high-profile premises. ($1 = 0.7636 euros) (Editing by David Goodman)