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Virgin France to declare insolvency

By | Published on Monday 7 January 2013

Virgin

The Virgin France entertainment retail company is facing insolvency, with the record shop owner already terminating the lease on its Paris store and expected to meet with unions later today to discuss the fate of the firm’s 1000 employees.

Richard Branson’s Virgin Group sold its French record store business to media company Lagardere in 2001, though allowed them to continue using the Virgin brand on the high street (unlike when the UK Virgin Megastore business was sold to its management in 2007, ensuring that it was Zavvi that went under eighteen months later). French investment firm Butler then took an 80% controlling stake in Virgin France in 2007.

Butler will officially declare Virgin France insolvent today, with talks expected to follow to see if the 25 store chain can be saved in any streamlined form. Entertainment retail in France has faced the same challenges as in the UK and elsewhere, possibly more so given the more rapid decline in record sales in the French market. The country’s leading entertainment retailer Fnac also announced a cost cutting and downsizing strategy last year.

News of Virgin France’s possible demise comes as the UK music industry continues to watch last man standing HMV very closely. Analysts expect that the all-important Christmas trading period was not sufficient to enable the British entertainment retailer to meet covenants attached to its debts, making ongoing talks with its money lenders this month absolutely crucial to ensure the firm’s survival.



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