All Virgin stores to close in the USMarch 4th, 2009 - 11:25 am ICT by Amrit Rashmisrisethi
Two decades of rocking the music world and CD releases, the remaining six Virgin Mega stores in the United States will be closing their doors this summer in another blow to recorded music. The shops received their branding from billionaire founder Sir Richard Branson and remained profitable, but the real estate firms that own the US chain determined they could command higher rent from new tenants.
The six remaining stores took in about US$170 million in revenue a year, down from the US$230 million from 23 stores at its peak in 2002.
A recent decision to close the Times Square location in New York, said Simon Wright, the chief executive of Virgin Entertainment Group.
The joint venture of Related Companies and Vornado Realty Trust bought the US chain in 2007, and with sales slowing, the companies figured they can make more money by simply turning the properties over to new tenants, who will likely pay much higher rents than the level locked in for many of the stores in multiyear leases.
The 52,000-square-foot Times Square flagship closes in mid-April, to be followed by another New York store and outlets in Los Angeles, San Francisco, Orlando (Florida), and Denver, all by June, Mr Wright said. About 1,000 staff and 60 at the corporate level will be laid off.
The first American store opened its doors on Sunset Boulevard in Hollywood in December 1992, but it closed early last year when its lease expired. There remain about 150 Virgin Megastores in the rest of the world, in France, Australia, Japan, and the Middle East. All are owned by local companies with licensing agreements that lead back to Branson.
Tags: billionaire, foot times, japan and the middle east, licensing agreements, local companies, music world, orlando florida, related companies, rents, simon wright, sir richard branson, square location, sunset boulevard, times square, virgin entertainment group, virgin mega stores, virgin megastores, virgin stores, vornado realty, vornado realty trust