The deal, just four months after 67 store-MVC was acquired from Woolworths for£5.5 million, enables Music Zone to realise at a stroke its target of doubling shop numbers, which was set following a£12 million management buy-out earlier this year.
Music Zone is now poised to seize a greater market share, but it is a market characterised by ferocious price competition, supermarket incursion and the growing threat of internet downloads.
Music Zone managing director Steve Oliver took control of the business from founder Russ Grainger in April, backed by Lloyds TSB Development Capital. He pledged to increase store numbers from 54 to 100 by 2007 and to double sales to£150 million.
Oliver said: 'This is an acceleration of the plan we set out in April and gives the company critical mass and national presence'. He dismissed bearish views of the entertainment retail sector and insisted: 'We have a USP on the high street, an established value brand that people recognise and trust. We are achieving all our targets.'
MVC will carry on trading from its remaining stores, but there is speculation that they may also eventually be sold. Fopp, another independent music specialist, is understood to be interested in the shops.
Woolworths offloaded loss-making MVC to an investment consortium in July, booking a£34 million exceptional loss on the deal. Woolworths chief executive Trevor Bish-Jones said he wanted to concentrate on the core variety store group business. Music Zone was among the bidders for MVC at that time.
No comments yet