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France's Virgin Megastore goes into liquidation
17.06.13 | Barbara Casassus
The Paris Commercial Court today brought the final curtain down on the Virgin Megastore chain.
As expected, the court ordered the group into liquidation, a week after rejecting the two remaining offers for a partial takeover. This came five days after the management closed down the 26 stores for safety reasons the day after staff occupied four of them, including the flagship store on the Champs Elysées in Paris.
The reason for the collapse is that the management failed to innovate as dematerialization spread, said Sylvain Alias, the representative of the union SUD. “It lacked a medium and long-term strategy,” he told The Bookseller. Books accounted for about 30% of turnover.
Alias claims that three or four of the stores were still profitable up until closure, and that the group’s debts mushroomed to €180m from €22m euros when the company filed for bankruptcy in early January. The staff continues to pressure for improvement in the layoff packages, and say they need €15m instead of the €8m now on the table.
Virgin Megastore was founded in 1988 by Britain’s Richard Branson with Patrick Zelnick, CEO of music publisher Naïve, at the helm. Lagardère group bought the French chain in 2001 and sold 74% of the capital to French private equity firm Butler Capital Partners in 2008. Separately, the French daily Le Parisien reported yesterday that the cultural products chain FNAC, which will go public on Thursday (the 20th), plans to lay off 600 more staff in the months ahead to reduce costs by €80m. follows 500 job cuts, including 310 in France, last year. The management denied there were more layoffs on the horizon, even though the group told the financial markets regulator that it would pursue its austerity policy in 2013-2014.