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High street music and greeting card retailers fold due to internet sales surge
Last updated at 23:52pm on 03.01.07
Online suppliers such as Tesco have seen a surge in sales
High street retailers Music Zone and Greeting Card Group filed for administration after struggling through Christmas under pressure from the internet and supermarkets.
Music Zone blamed "challenging trading conditions" and weak pre-Christmas spending as it struggled to compete with aggressive pricing across the DVD and music market.
Administrators Deloitte said it would attempt to sell Music Zone - which boasts a chain of 104 stores across the country from Inverness to Penzance - as a going concern.
Deloitte said there would be "no immediate redundancies" among the 1,100 staff at Music Zone and added that the shops would stay open.
Meanwhile, Greeting Card Group said "retail conditions have remained challenging" since a restructuring last year.
Administrator Mike Jervis, of PricewaterhouseCoopers, said the company suffered from a "decrease in high street footfall over recent months".
The group is the second largest specialist card and gift retailer in the UK with more than 2,500 staff and more than 470 stores under the Cardfair and Card Warehouse brands.
The troubles at Music Zone and Greeting Card Group were revealed as wine warehouse Majestic posted a strong performance for Christmas and department store John Lewis reported bumper figures for the first week of its January sale, driven by sales of half price cashmere jumpers.
The contrasting fortunes highlighted the difference between winners and losers on the high street for the festive period.
Last month HMV admitted it was also grappling with "very difficult conditions" as Christmas shoppers failed to add sparkle to sales. The music and bookshop owner said it expected the high street environment to remain difficult for the rest of the year.
The comments from HMV echoed those made by Woolworths earlier in the month when it said the entertainment sector had been its weakest market.
Retail analyst Richard Ratner, of Seymour Pierce, warned in early December that it could be the worst Christmas for some retailers for 25 years.
Music Zone said in a statement: "There is a growing number of high street retailers like Music Zone experiencing challenging trading conditions. Pre-Christmas spending was poorer than expected.
"The decision by our bankers to recover debts and withdraw credit facilities without notice and with immediate effect left us and our private equity backers with no real alternative other than to appoint administrators."
In January last year, Music Zone said it was "optimistic about future growth" after doubling in size with the acquisition of 43 former MVC stores, which it bought when MVC went into administration.
Greeting Card Group, which is based in Peterborough, made revenues of £70 million in the year to June 30.
PwC administrator Mike Jervis said: "Greeting Card Group is well established and historically profitable, but has suffered from the generic decrease in high street footfall over recent months."
He added: "The core stores have been and are expected to continue to be successful. As a result we expect to achieve a going concern sale and are currently in talks with a number of interested parties with a view to achieving this."
