Music Zone in Administration

highguyuk

I found out that they were in administration when I past one of there stores yesterday in Burton.

They had a notice on the window stating that as they were in admin. they weren't accepting cheque or cards - just cash.

Nothing else. No closing down stuff or cheap stuff. They have only just opened in Stafford, about a month ago! But they look v.overpriced on some items.

Music Zone, who bought 40 of MVC shops when they went bust, said that custom over Christmas was no where near the level they expected and internet sales had hurt them. (Read that somewhere?)

spuds_2

I believe the Stockport guy sold the Music Zone business and last I read was investing in a chain of furniture shops in the north west. I used to like Music Zone but I don't think that they have been as cheap as they used to be for a while now. They were always expensive for recent films, though I did buy the Eerie Indiana boxed set for about £12 last week and a great book of movie posters for £7. Since we bought a dvd recorder we have bought a lot fewer dvds - saved a fortune.

Rocket_Rick

Lets get this all straight. I work for Music Zone in their Head Office.
The company was originally set up by Russ Grainger 21 years ago. He opened stores mainly in the North West and North East.
2 years ago he was bought out by the senior management in HQ. Steve Oliver the MD was FD and became our new MD. Russ then left the company to buy out a small furniture chain in Cheshire called House.
Steve and the rest of the team then started expanding the store base (when Russ left we had 50 stores). We carried on our organic growth through 2005 to take our store base upto 64 stores.

Throughout 2005 we ran due dilligence on the MVC chain which was part of the Kingfisher group (which includes B&Q and Woolies). We nearly aquired the chain in the summer of 05 and then pulled out of the deal as it wasn't right for the Zone. In Christmas 05 Woolies decided that MVC was not a profitable arm of its music sector and put the company into administration.
We then negotiated with the adminstrators the aquisition of 43 stores. These where the best 43 stores MVC had and profitable stores.
Fast forward a year to this Christmas and we had a profitable Christmas. We had posted good figures to the banks and private equity investors. Everything was rosey, we were planning our store opening plan for 07 and have a very strong management team, quality DC and fantastic agreements with all the major music & film suppliers.
The downfall this Xmas has been the continual price erosion by the supermarkets on top level CDs & DVDs. They have single handedly set out to destroy the market place this Christmas by selling products often at 1-2% margin or on releases like Ice Age at negative margin. To Asda & Tesco they do not care about the profit on the CDs & DVDs as they make their money back on people spending over £75 on food.
The other issue this Xmas has been that footfall on the high street has been down 11% due to online shopping (even though this only equates for 6% of the CD & DVD market share- phenomenally low considering all the press online retailers get!!).
So, lets get to the nitty gritty. Music Zone had a fantastic Christmas in an adverse retail environment. Woolworths and HMV both posted profit warnings in mid December (do your homework and you will realise that both of these retailers have much higher average retail baskets than Music Zone and both have been struggling all year- just wait for the press releases from both retailers in the next 4 days!!). With these two retailers saying that they where having a bad QTR 4 this panicked our bank (Bank of Ireland). They decided to shaft us big style. They waited until we had cleared the most amount of money after Christmas and without warning pulled their full backing, overdraft and loan. This left our other backer (LDC- who where very pleased with our performance this year) little or no choice to pull their investment as they could not take on BOI's loan.
At the moment we have Deloitte in who are very positive that they will find another backer and keep all our staff in jobs. The management here are very positive that we can carry on making Music Zone the true value and deep range music/film retailer alternative to HMV.
Guaranteed 2007 will be the hardest year for entertainment retailers but if you speak to anyone within the industry, the one they expected to go tits up this Xmas where Woolies and Virgin.
I hope this clears up who MZ are and what has gone on.

Call_Centre_Guru

Rocket Rick, Good Luck and all the best to you and your colleagues

UKTigerlily

I gave my Mum Muzic Zone vouchers as part of her xmas stuff, is she still gonna be able to use em Rick?

Rocket_Rick

Hi UK Tigerlily,
Thanks for getting your mum Zone vouchers for Christmas (its one of the products I buy for the company and I can't believe how many we sold this Christmas- over a 400% rise LFL on vouchers this Xmas). In answer to your question, your mum can still reedeem her vouchers in the Zone. She won't get any cash change though so she should do her best to max out the voucher.
We have 80% Off Sale running at the moment with over 4000 lines of stock in the Sale so hopefully there should be something she wants.

Must say, things are looking positive in the office today and hopefully there won't be the need for any redundancies. We are fighters here and don't want our little baby to fall flat on its nose.

Erinath

Glad to hear things are sounding positive there Rick, been made redundant myself in the past & wouldn't wish it on anyone. Good luck.

spuds_2

I hope Music Zone stay in business - it's nice to see competition to Tesco and Sainsburys and more choice is always good. Good luck.

marty1888

spuds wrote:

I believe the Stockport guy sold the Music Zone business and last I read was investing in a chain of furniture shops in the north west. I used to like Music Zone but I don't think that they have been as cheap as they used to be for a while now. They were always expensive for recent films, though I did buy the Eerie Indiana boxed set for about £12 last week and a great book of movie posters for £7. Since we bought a dvd recorder we have bought a lot fewer dvds - saved a fortune.

Owns a shop called Home in Didsbury. Quite Nice stuff in there.

lellie

I was surprised when I heard this. I used to buy quite a lot there but not bought anything in the past years as prices are no longer very cheap and they don't sell vinyl, which is the format I tend to buy albums in these days.