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Fopp, one of the country's biggest music retailers, was today readying to appoint Ernst & Young as administrator after telling some staff that they would not receive their pay packet tomorrow.
The store had already stopped taking credit card transactions and halted online sales in the past few days as it talks with its bank.
One member of staff told Times Online today that he had been told his store would not open tomorrow and that staff would not receive their monthly pay packet, due tomorrow.
But this afternoon no one was immediately available to answer calls or confirm that the stores are due to close tomorrow.
The company closed 50 stores on Friday, including its flagship one on London's Tottenham Court Road, for a special stock check, just a week after it told publishers to halt book supplies on both new orders and range replenishments.
The chairman and major shareholder Gordon Montgomery, who founded the chain from a market stall in Glasgow in the early 1980s, admitted at the weekend that sales were falling. "We are experiencing difficulties. However, I can categorically state we will not go into administration."
In a statement released at the weekend, the company said: "Fopp continues genuine and lengthy negotiations with its bank, and is not in administration. Stock taking is now complete, stores re-opened on Saturday 23rd and will continue to remain open."
A notice on Fopp's website today states "Due to circumstances beyond our control we cannot currently take orders online. Sorry for any inconvenience caused."
In a probable sign of growing pressure from Fopp's bank, store staff reported that they are also unable to take card payments in the store and that all sales must be cash only.
One said today: "I'm sorry we don't accept cards any more across all the stores, due to a problem with our system."
It is thought Fopp's acquisition of 67 stores from the administrator of failed rival Music Zone in February may have put pressure on the company's cash flow.
But all specialist retailers of CDs and DVDs have been hit by growing competition from online downloads and supermarkets. HMV today reported a 70 per cent fall in profits. Music Zone's demise was blamed on the same factors.
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I can't believe this has happened for the 3rd time in less than three years. It's terrible. The high street music shop appears to be dying out. How very sad. I for one will NEVER download music!
Alice, Worthing, Norfork, UK
I am sorry for the staff that have lost their jobs, and received no pay. I really liked this store and was gutted to find it was closing. what happens to the people who have been given gift voucher and now unable to receive goods. That's not on.
forster, bristol,
I personally think it is a great shame that yet another seemingly successful high street chain has gone into administration. It seems as if senior management may have taken slightly more than they could chew. I personally however feel that the high street will be back and over the next 20 years or so their will be a move away from the large supermarkets like Tescos and Asda and towards small local indeopendant stores like Fopp once was. I am afraid however I feel the internet is rather here to stay.
Oliver Whittall, Gloucester, GL
Well, when I wrote that, I hadn't heard about the talks with administrators. Of course it is sad when people lose their jobs - but it sounds like the management team should have been able to see these problems looming well in advance. Losing employment is a hazard that we all face, but there should have been no reason for people to go unpaid.
Will Matthews, Shenfield,
The only people who gain from this are the administrators with their over inflated fees.
As to who is to blame? How about the likes of Sony etc who take the majority of the mark up on CD's. By the time CD's / DVD's hit the shops the profit margin for stores is tiny. The industry is in a downward spiral and will continue to fall until the fat cats at Sony give a better deal. After all, who will sell their products when there are no stores left on the high street selling their products.
Mr Matthews - not everyone has internet access (it's true!) and even those who have, some of us still enjoy searching through the racks in our local music stores... Which are now getting harder to find than the rare CD you may be searching for!
A bitter and twisted EX music retail employee, Manchester, UK
I am sure Mr Matthews is sympathetic to the problems facing the now ex-employees of Fopp. But his argument stands. High street music stores could soon be history. As a leading analyst covering the market, I can say there is nothing pseudo about this argument, however, questions need to be asked about how the management of the company can let the situation deteriotate so quickly? They'll blame the bankers - but ultimately they should have seen this coming.
R F Perks, London, UK
Fopp posted a profit of £186,000 on a turnover of £40,000,000 for year ending 2006 which is marginal to say the least . In a declining market, taking on a store on Tottenham Court Road at a rent of at least £650,000 pa. strikes me as a risky strategy !
atom 41, nottingham, uk
If my analysis is so wrong, then please tell us the real reason behind the demise of a store that I have spent several hundred pounds in? I think your management have a lot to answer for in this case - you don't decide that you won't be able to pay your staff from one day to the next.
Will Matthews, Shenfield,
I work/worked for Fopp. I say worked because technically we've been told we're 'on leave'. I didn't get paid this month. Who's going to pay my mortgage, bills and food? Mr W Matthews, since you're a music lover who has nothing to fear, can you pay my bills this month? Your statement is ludicrious in its psuedo market analysis. I have £16 to last me until I find another job, who won't pay until the end of July, providing I find a job within the next week or so. A whole month on £16, even a beggar needs more than that.
A Fopp Worker, England,
Sure Will Matthews, music lovers have little to fear. Never mind the poor employees losing their jobs, and out of pocket.
Domo, Nr Guildford,
The Fopp stores do a better job than most when it comes to catering for the music enthusiast as opposed to the casual chart album buyer. However, it is the fast moving chart albums that generate the sales. Commodity items like these don't need to be sold in specialist stores, so other retailers, like supermarkets can cream the market, depriving retailers like Fopp of a valuable source of sales.
The other half of the argument is that the back-catalogue stuff that Fopp does so well, is more cost effiecient to provide online. A successful line in back catalogue sales requires a large amount of slow moving stock, and keeping this on prime high street space is never likely to be a cost efficient strategy.
Ultimately, it will be a shame if retailers like Fopp disappear, but as long as the internet can fulfill the same functions, music lovers have little to fear.
Will Matthews, Shenfield,