Branson sells Virgin Megastores

The tycoon's Virgin Group sold music store chain Virgin Megastores in the UK and Ireland for an undisclosed sum to a management buyout team led by managing director Simon Douglas and finance director Steve Peckham.

During the next month, the 125 stores will be rebranded as Zavvi after Zavvi Entertainment Group - the buyers of the business.

Sir Richard founded Virgin as a mail order record company in 1970 before opening a store in London's Oxford Street in the following year.

It then moved to new, enlarged premises in 1979, forming Virgin Megastores' flagship shop.

Virgin has been offloading its entertainment retailing operations by franchising out its international business over the past six years, and the UK and Irish chain was the last wholly-owned retail business. However, the Virgin brand will continue to be represented at the chain through in-store Virgin Mobile and Virgin Media concessions.

The sale represents the latest development in a sector that has been plagued by falling sales and increased competition. The Virgin Megastores brand and HMV were the two last remaining national retailers following a raft of closures over the last few years.

Familiar names such as Andy's Records, Tower Records, MVC, Music Zone and Fopp have all disappeared from the high street, as CD sales fell victim to rising digital downloads, pirating, and competition from cut-price retailers such as supermarkets.

Mr Douglas, managing director for the new company, said: "This deal secures an exciting future for Zavvi and for all our staff, with a real belief that, despite escalating competition, there is still very much a place on an increasingly homogenised high street for an independent entertainment specialist that puts customers, product, service and personality at the top of the agenda."

The deal will not have any impact on jobs at the chain, which currently employs some 2,500 staff.