No More French Virgin?

Music retail chain Virgin France is shutting its flagship Paris store in a bid to save some of the remaining couple of dozen shops it has dotted around the country.

The company, which was sold off by Richard Branson’s Virgin group in 2001, says it is forced to declare insolvency with debts of around euro 22 million ($28.9 million).

Virgin officials hope that shutting the store on the Champs-Elysées in Paris is part of an “emergency plan” to save the firm and some of its 25 stores.

The company, which employs about 1,000 people, is – like major UK chains such as HMV – blaming its downturn on the collapse of the CD and DVD markets as customers shift to digital music and films, and illegal downloads.

The UK chain has admitted dire sales mean it is likely to breach its banking covenants later this month. HMV’s management is currently in talks with lenders.

Virgin France is owned by the French investment company Butler Capital, which bought 80 percent of Virgin from the media company Lagardère in 2007, which still holds 20 a percent stake.

In the first nine months of 2012, Virgin France claimed sales of CDs and DVDs had dropped by almost 15 percent.
It’s now saying the company would hold a works council meeting Jan. 7 to officially declare its insolvency and discuss last-ditch ways of avoiding a shutdown.

Over the last two years the company has already closed several shops and cut staff by 200.  The new management board, appointed in the middle of last year, has said that it would take a further two years “to restructure the chain and reduce the size of stores.”

Last year Fnac, another French high-street media store that employing 11,000 people, announced it had to make savings of euro 80million  and shed more than 500 jobs.