Musicland Files Chapter 11

In another sign that traditional record buying habits are changing, the parent company for Sam Goody music filed for Chapter 11 bankruptcy protection January 12th.

Location and competition were also considered factors.

Musicland Holding Corp., which also owns Suncoast video stores, has had several bad years because the mall-based Sam Goody chain has been faced with competition from the discount capabilities of superstores like Best Buy.

Sales plunged 42 percent, from $1.89 billion in 1999 to an estimated $1.1 billion in 2005. The company last made a profit in 2001. The bankruptcy filing was made in hopes of being able to exit some of the unprofitable leases on Sam Goody stores.

“We have a number of stores in locations that aren’t ideal,” company CEO Michael Madden said. “We need to clean up and reposition our real estate portfolio.”

The Sam Goody and Suncoast chains will continue to operate in the meantime, Madden said, and it was too early to say which stores would be closing.