labels: Entertainment, Retail
Britain's largest music and entertainment chain Zavvi Group shuts 22 stores news
08 January 2009

Britain's largest independent music and entertainment chain Zavvi Group's administrators have announced the closure of 22 of its UK stores, after the retailer passed into administration.

This follows kids retailer Adams Childrenswear announcing on 6 January the shutting down of 111 stores, and the closure of retailing giant Woolworth's network of 800 plus stores on 5 January, hit by steep discount sales to nudge plummeting consumers spending on account of the global credit crisis. (See: UK's kids retailer Adams Childrenswear shuts 111 stores )

The remaining 92 Zavvi stores in the UK and Ireland will continue to sell goods at deep discounts till the stock last and until administrators try to find a suitable buyer for the company.

Joint administrator Tom Jack said 178 workers at the 22 stores who have been laid off would receive maintenance support from the Insolvency Service's Redundancy Payment Office and Jobcentre Plus.

Administrators at Ernst & Young were appointed in December to run the company after it filed for bankruptcy protection. It said that good offer for Zavvi's operations was difficult to come by in the current global recession.

Jack said that despite good Christmas sales from consumers it was not possible to support continued trading across all Zavvi stores.

Zavvi was formed after the management buyout Virgin Megastores group, had 114 stores with about 2,400 permanent employees.

Zavvi went into administration on 24 December after the collapse of its main supplier of music, DVDs and games, Entertainment UK Ltd. (EUK), which went into administration. (See: UK's iconic Woolworth store will shut down in January ) The collapse of EUK left the company unable to fulfill customer orders, Zavvi said in its website.

Zavvi said, ''On 27 November 2008 Entertainment UK Limited (EUK), the zavvi UK's main supplier, went into Administration. Since this time, the Group has been unable to source stock in the usual way and has been forced to enter into new trading arrangements.''

''In addition, the Group has recently experienced a material fall in revenues due to the abrupt downturn in consumer spending. As a result of the above factors the Group began to experience significant cash flow pressure and ultimately became unable to pay its debts as they fell due,'' said the company website

With this, the number of companies that have entered administration have significantly increased with crystal and china and ceramics firm Waterford Wedgwood still on the administrator's block with about 2,800 employees waiting to lose their jobs, when the axe falls.

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Britain's largest music and entertainment chain Zavvi Group shuts 22 stores