Zavvi calls administrators as 3,000 jobs at risk
Zavvi falls
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Wednesday, 24, Dec 2008 11:18
CD and DVD retailer Zavvi is going into administration.
The music store – formerly Virgin Megastores – has announced extra sales today, but a late Christmas rush was not enough to save it.
It is unclear if the firm's 125 stores will close and how many of its 2,300 permanent staff and 1,000 temporary staff could be lost.
Tom Jack, joint administrator, at Ernst & Young, said: "With dire trading conditions on the high street, the Zavvi group has seen a material fall in sales and the directors have now been forced to place parts of the group into administration."
It is hoped the firm will be able to come through administration and remain open and jobs in place.
"The administrators intend to continue to trade Zavvi UK with a view to selling all or part of its business as a going concern,” Mr Jack said.
Today Officers Club and Whittard of Chelsea have both managed to leave administration with new buyers and jobs protected.
However, Woolworths was not saved, but there are rumours of early negotiations for the Woolworths brand to be brought back
Zavvi has particularly bee affected by the collapse of Woolworths and its distribution arm EUK.
The music retailer reportedly owed EUK £106 million and EUK supplied Zavvi with CDs and DVDs.
"Since EUK went into administration, and perhaps before, the impact of problems at EUK on the Zavvi group has been significant,” said Mr Jack.
"Minimal deliveries, no returns and worse trading terms are just some of the areas impacted.”
The chain was sold by Sir Richard Branson to Zavvi's management team for £1 in 2007.
Simon Douglas and Steve Peckham, founders of Zavvi, added: "We would like to thank all of our employees for their commitment and support since the launch of zavvi.
“We have done all that is possible to keep the business trading, but the problems encountered with EUK, and particularly its recent failure, has been too much for the business to cope with."
Zavvi stores will remain open today and on Boxing Day as planned.