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Entertainment retailer zavvi goes into administration

by Scott Bicheno on 24 December 2008, 11:21

Tags: zavvi

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Domino effect

Zavvi claimed to be the UK's largest independent entertainment retailer. Its main supplier was Entertainment UK (EUK), which was the distribution arm of Woolworths and which also went into administration when Woolworths did.

As a consequence Zavvi, which was formed in September 2007 from a management buy-out of the Virgin Megastore chain, was forced to look elsewhere for stock and was offered less favourable credit terms than it had received from EUK.

This meant that it ran out of cash and today appointed Ernst and Young as administrators. Joint administrator, Tom Jack, said "Since EUK went into administration, and perhaps before, the impact of problems at EUK on the zavvi Group has been significant.  

"Minimal deliveries, no returns and worse trading terms are just some of the areas impacted.  In the absence of a buyer for EUK, and with dire trading conditions on the high street, the zavvi Group has seen a material fall in sales and the Directors have now been forced to place parts of the Group into Administration."

Additionally zavvi Guernsey has been put into liquidation, but the Ernst and Young statement says: "At this time zavvi Ireland is not subject to any formal insolvency proceedings." The retailer has 114 stores in the UK and 11 in Ireland, employing a total of 2,363 permanent and 1,052 temporary staff.

The group's founders, Simon Douglas and Steve Peckham, said: "We would like to thank all of our employees for their commitment and support since the launch of zavvi.  We have done all that is possible to keep the business trading, but the problems encountered with EUK, and particularly its recent failure, has been too much for the business to cope with."

Jack concluded by saying that zavvi UK will continue to trade and that all stores will open as normal on Boxing Day.


HEXUS Forums :: 10 Comments

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A mate of mine in the DVD distibution business told me that this might be coming a few weeks ago, looks like he was right! Not good news :(
That's fine by me.

Since the buyout from Virgin I've had one dealing with Zavvi and it was my worst experiance of buying on-line ever, their customer service was apaling.
Inability to source stock, you'd think they'd be prepared when they heard about woolworths months ago and have an alternative…
you'd of thought a business like that would have more than 1 supplier. all your eggs in 1 basket springs to mind lol
I'm saddened although not very surprised by the news… since EUK went down they stopped taking online orders and had lots of orders pending, they would've lost money with EUK and have had to refund their customers…. talk about a double whammy!