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Fopp missed rescue opportunities

01.07.07

Entertainment chain Fopp missed two opportunities to save itself, according to the weekend press. The Times reports that a last-ditch bailout by Sir Richard Branson’s Virgin Megastores failed to win support from its suppliers, while a rescue package offered by its bank HBOS was declined by Fopp's management.

Meanwhile, BBC Online reports that workers at the collapsed music retailer are set to learn their fate on Monday as prospects for the possible sale of the business are considered.

The retailer closed its stores for the last time on Thursday, after two weeks ago alarming publishers by cancelling books orders. Receiver Ernst & Young was eventually appointed late on Friday.

The Telegraph reported that HBOS, Fopp's bank, offered last month to install a chief restructuring officer at the retailer to implement a turnaround strategy. The move - which would have led to a number of store closures - is understood to have been declined by Fopp's management. The bank is also understood to have offered to extend Fopp's overdraft if the retailer accepted its proposal.

The Times reports that rival Virgin Megastores, controlled by Sir Richard’s Virgin Group, had attempted to merge with Fopp, injecting a big rescue loan and taking a 10 per cent stake in a new entity. In a deal negotiated by Virgin's Simon Douglas, Virgin would have kept the Fopp brand. A source said: "In the end the numbers just didn’t add up and suppliers to Fopp would not support it." It is understood that Virgin Megastores also had a discussion with HMV about a tie-up but it could not agree terms. HMV refused to comment.

Meanwhile, Fopp is informing customers on fopp.co.uk that any outstanding website orders have now been cancelled and will not be fulfilled or charged.

The Times

Retail Virgin HMV Fopp

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