The problems at the 100-store chain come almost exactly a year after it nearly doubled in size by rescuing much of the former budget music chain MVC from insolvency.
In news that will spook retailers the length of the High Street, Music Zone has reportedly filed a notice of intention to file for administration - the insolvency arrangement giving companies protection from creditors - in its home town of Manchester.
The struggle for private equity-owned Music Zone follows hard on the heels of profit warnings from leading music store and fellow quoted retailer Woolworths, which also relies heavily on CD and DVD sales.
The tough market is blamed not only on the rise of iPod and MP3 players but also on a year of poor releases with no standout mega-selling albums or films that have gone to home-release.
Music Zone’s problems come after a roller-coaster ride for the company. Having started the business from a market stall in Manchester in the 1980s, founder Russ Grainger had built it into a 54-strong chain by 2005 when he cashed in his chips, banking 10m after selling the business to Development Capital, the bank’s venture capital arm.
It bought 41 MVC stores from the administrators a year ago, just months after MVC had been spun out of Woolworths. Music Zone has already been forced to close a store on Oxford Street because of high rents. It has 20 outlets in the South-East but only one in the capital, at London Bridge.
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The problems at the 100-store chain come almost exactly a year after it nearly doubled in size by rescuing much of the former budget music chain MVC from insolvency.
In news that will spook retailers the length of the High Street, Music Zone has reportedly filed a notice of intention to file for administration - the insolvency arrangement giving companies protection from creditors - in its home town of Manchester.
The struggle for private equity-owned Music Zone follows hard on the heels of profit warnings from leading music store and fellow quoted retailer Woolworths, which also relies heavily on CD and DVD sales.
The tough market is blamed not only on the rise of iPod and MP3 players but also on a year of poor releases with no standout mega-selling albums or films that have gone to home-release.
Music Zone’s problems come after a roller-coaster ride for the company. Having started the business from a market stall in Manchester in the 1980s, founder Russ Grainger had built it into a 54-strong chain by 2005 when he cashed in his chips, banking 10m after selling the business to Development Capital, the bank’s venture capital arm.
It bought 41 MVC stores from the administrators a year ago, just months after MVC had been spun out of Woolworths. Music Zone has already been forced to close a store on Oxford Street because of high rents. It has 20 outlets in the South-East but only one in the capital, at London Bridge.
This entry was posted
on Friday, January 12th, 2007 at 3:40 am and is filed under Stocks.
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You can leave a response, or trackback from your own site.