Robert Lindsay
We've made some changes
to The Sunday Times
Fopp, one the country’s biggest music store groups, with about 80 shops and 800 staff, today called in receivers after a last-ditch bail out by Sir Richard Branson's Virgin Megastores failed to win support from Fopp's suppliers.
All the stores have closed and staff have been sent home, their monthly salaries unpaid. The Times Online has learnt that rival Virgin Megastores, controlled by Sir Richard's Virgin Group, had attempted to merge with Fopp, injecting a big rescue loan and taking a 10 per cent stake in a new entity.
In a deal negotiated by Virign Retail's chief Simon Douglas, with Fopp's managing director David Pryde, who once ran Our Price records, Virgin would have kept the Fopp brand. But a source close to the deal said: "In the end the numbers just didn't add up and suppliers to Fopp would not support it."
Like Fopp, Virgin Megastores sales have been hit by fierce cut price competition from supermarket giants such as Tesco and digital music downloads. It hopes to avoid as bad a battering as Fopp because it has additional revenue from concessions with mobile phone companies.
It is understood that Virgin Megastore also had a discussion with troubled HMV about a tie-up after it was approached by the listed music chain but it could not agree terms. HMV refused to comment on this but said it was not currently in talks.
Tom Burton and Colin Dempster from Ernst & Young have been appointed Joint Receivers.
Mr Burton, commented: “The stores have been closed by management yesterday and shop staff sent home. We are currently assessing the financial position of the companies; once this has been completed we will have a better idea of the future of the businesses.”
Earlier in the day, in a short statement, Fopp, founded by Gordon Montgomery from a single stall in Glasgow 25 years ago, said: "It is with great regret that we announce the closure of Fopp. Our store chain is profitable, well regarded and loved by our loyal customers and staff.
"However we have failed to gain the necessary support from major stakeholders, suppliers and their credit insurers to generate sufficient working capital to run our expanding business."
Other sources questioned whether the chain was profitable and it is thought that it may have over-reached itself with the acquisition of 68 Music Zone stores from the administrator in February.
Of those stores it bought it later had to shut some 37 and now has about 81 stores in total.
The company shut the stores on the day staff were due to receive their monthly wages, raising fears that it does not have enough cash to pay them.
Despite its claim that it is profitable, the statement indicates that suppliers had withdrawn credit and its insurers were refusing to underwrite the company's credit.
It earlier halted credit card transactions and online sales.
E&Y's appointment come a week after Fopp closed its stores, including its flagship on London’s Tottenham Court Road, for a day for an extraordinary stock check.
Mr Montgomery, the chairman and major shareholder of Fopp admitted last weekend that sales were falling. “We are experiencing difficulties. However, I can categorically state we will not go into administration.”
In a statement issued at the weekend the company said: “Fopp continues genuine and lengthy negotiations with its bank, and is not in administration. Stock taking is complete, stores reopened on Saturday and will remain open.”
All specialist retailers of CDs and DVDs have been hit by growing competition from online downloads and supermarkets. HMV yesterday reported a 70 per cent fall in profits. Music Zone’s demise was blamed on the same factors.
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I work in the industry and would not be suprised if there may have been actions to make things difficult for them and maybe someone buy it on the cheap. The other chains certainly were very aware of their popularity and an issue about them was raised by our distributor around February this year that they could not get the credit insurers to raise the levels of insured product because of the purchase of music zone stores and if we wanted to put product into Fopp it had to be at our own risk.
Something doesnt seem quite right
Also the staff on here who were not paid, Im so sorry and I have been in this position myself from both angles and it isnt as simple as it seems. Wage slips have to be done for the purpose of the administrator knowing what is owed, even if the company cant pay it, it may also be that the money that was taken was needed to actually put the company into administration. Unless another company "winds you up", going into administration voluntarily costs a bomb.
Vicky, Canterbury, Kent
shocked! went to go to camden to get my weekly stock of cds and a dvd or two and not open only on driving through london today did i realise what had happened. this was the best music shop on the high street great cds and movies that cost a fortune elswhere. What a shame grteed killed this great place. sorry to the staff you m,ade it what it was. r.i.p
greg, london,
Fopp was a great shop, I can't believe it's gone!! It had a great atmosphere and was as cheap as online prices. They're £5 cd section was brilliant, and I'd always walk away with something. It was always packed when I was in. I blame this on the banks.
RIP my friend...
Iain, Stonahaven, Scotland.
I am devasted!! I bought all my dvds in FOPP and lots of nice books as well - HMV doesn't have such a variety on european and alterantive movies/books so not sure where to go to do my shopping now...
Kim, Guildford, UK
Im sorry Fopp. I wish id shopped there more. How unromantic to have to shop from supermarkets! I hope it never comes to that though. Im determined to support my local cd shop because the price of a dead high street is bigger than a couple of extra quid for a cd!
elena georgiou, london,
i miss fopp it was a very cool shop that always kept me busy buying loads of cd ,dvds come back!!!
zarish, bedford, beds
I loved FOPP!!!!
I always went in for a look when i was in town and usually came out having bought something!
I am sad that it has closed down!!
Bring back FOPP!!!
Jade, Dundee,
I am quite sad about this. Fopp had a great variety of difficult to obtain CDs and DVDs and sold them very cheaply.
A visit to Bath was not complete without an hour or so spent in the two stores. I usually emerged with a bundle of CDs. Edgar Broughton, Pink Fairies. You name the obscure band and they would have a pile of CDs at rarely more than £5.
A sad loss.
bob, Trowbridge, Wilts
As a small business owner selling Dvds and Cds from a store in Bury I disagree that we have been hit by the likes of Tesco. We run a "personal" one to one business with our customers being our main priority. This has seen us thrive the last 3 years. With customers often complaining about the likes of Music Zone staff being too busy to even say hello!!"
We will continue to offer the old fashioned service that our country now lacks and continue to win back customers from the big faceless stores. As for price we personally find that you can undercut some of the lines, but what you gain in good customer relations ie remembering there names etc is far better, and my customers will come to us first now and pay a little extra if need be.
We will never get too big for our boots!
Michelle
Findafilm
Bury Open Market
michelle massey, bury, lancs
Fopp was a popular concept, much appreciated by the music buying public. The Bath stores, where I used to shop, were both well staffed and stocked and it is sad, in these days of mediocrity in the high streets, to see such innovative stores failed by what appears to be greed and poor vision by top management, forcing them to close.
Like in Bath, many cities have two stores which seems shortsighted, and, given the circumstances, a tad overzealous, and maybe these could be split, with just one Fopp per town, and the leases sold on the second premises.....this could release funds.......and voila, money could be release for staff who deserve to receive their due pay and outstanding monies.
Georgie Bishop, Dorset,
Fopp was a breath of fresh air when it opened in Reading, a welcome alternative to Virgin, and the still very expensive HMV. HMV's prices in the current business context are laughable, surely with a 75% fall in profits they too will soon be at risk, unless one of the overpaid board members earns their salary by coming up with at least one creative idea. The answer: buy CD's online. You can always find what you want far cheaper than on the high-street. And avoid poor quaility music downloading until the quality increases and this silly licencing is removed. If you love music, you want to properly own it. Fopp overextended itself and paid the price. The least they could do is pay their staff. The fact they have not done so is appalling. Will any authority ensure they will receive the money they have earned? I doubt it. Sad.
Paul H, Reading, England
Fopp was my favourite shop, I liked the atmosphere, their prices, wednesday jazz events at tottenham c.r.. and I still have two gift vouchers to use.. :(
Reeno, London, Uk
I would agree with a statement made by Andy Jones, there was no stocktake and the company has not paid our wages to my knowledge, yet myself and another member of staff i worked with have recieved wage slips which we both find strange. We too were also informed that we couldn't use the money in the safe to pay our wages which as everyone knows, no paying an employees wages is against the law! My opinion is that fopp shouldnt of bought so many ex Music Zone stores. I used to work for them too and was there when they went into Admin. This is all too familiar.
Anonymouse, London, UK
To the marketing student - Virgin Megastores is an continuously loss-making company struggling to get into the black with less than 200 stores nationaly. A while back Branson actualy bailed them out personally at the last minute so they could pay supliers and receive new release.
Not really a monopoly, just Virgin's face on the high street. As the article mentions, the Virgin Media concessions help keep it going and they're happy to take any other offers of money for instore space/advertising for the same reason.
A merger with Virgin would have helped both and who knows, a monster on the high street could be good - internet prices in store? I'd be happy with that!
Manc, Manchester, England
Having followed the Fopp drama in Publishing News and The Bookseller, I was unsurprised to hear that Fopp have found themself in this situation.
I am however, rather upset to see such a dynamic and exciting chain cease to trade. Fopps range and pricing structures allowed the chain to stand out on a high street filled with big names and big prices.
I personally cannot see how chains such as HMV and Waterstones are able to compete with supermarkets such as Tesco- The Competition Commission was very wrong when they decided not to act against Tesco. The rise of supermarkets is the downfall of the high street.
P McMahon, Southampton, UK
While there are various comments regarding the closure of the fopp chain, it is important to point out appaulling treatment of the staff by the management. They knew for a long time that this was a likely result thought let everyone carry on working knowing they would not be paid. The email that came from head office did not contain any form of apology. They then demanded that all the store and safe keys be sent directly to them. This would leave the staff with nothing to bargain with. Currently it is believed that none of the managers are returning the keys until the wages have been paid
xman, guildford,
Its not a surprise at all really, this is what happens when you try to take over the world by buying completely non-profitable stores (the buying out of music zone). I feel sorry for the Fopp staff to be honest, they had a really good chain of stores and it seems to have all been ruined by the take-over of music zone. Good luck everyone.
Craig, Liverpool, UK
Hahahahahahahahahaha! Who's got the last laugh now? I DO!
Never Mind, Neverland,
The supposed stocktake last friday was a smokescreen, no stocktakes took place. The company did not bank any money for over a week so there was more than enough money in store safes to pay staff. We were not allowed to use this money, that is why staff are so upset.
andy jones, newport, uk
I'm a first year marketing management student, so please excuse what i'm about to say. I have never ever heard of Fopp. HMV and VM is in everyone's faces all the time it would be impossible to miss them. What I want to know is why didn't fopp invest in a marketing campaign, get seen by the emerging audience and then take it from there. I think Fopp was too hasty in trying to expand aswell. I'm glad that VM didn't merge with them because that would be ridiculous... Monopoly-out-of-control ridiculous.
Londoner, London, UK,
had only recently found your stores on a visit to bristol 3 stores found with the aid of my son who lives there. fell in love with the stores at once. returning home to london checked out the website found 5 and visited 2 was going to visit them all then this bombshell news. i'd rather it had been hmv going whom i used to love but then they got greedy and more expensive. fopp was like a breath of fresh air good choice good prices come on richard branson save fopp and keep them going under the fopp name.
FRED PIGDEN, fulham, london, uk
I worked at music zone bullring as loss prevention, i loved my job, like the staff loved there`s, we met gordon, he is a lovely bloke, we are now just wondering when we will be getting paid, some of us have families and morgages to pay
keith, birmingham, united kingdom
It was obvious Fopp was off the rails when 4 of the senior management were emptied in 2005 by Montgomery.
The next phase of Fopp management offered the customer nothing they couldn't get elsewhere.
So, farewell then Fopp.
Digital Plamf, Edinburgh, Scotland
what a disgrace!
cannot believe it.
fopp had an amazing dvds and cds selection.
will be truly missed.
belinda frikh, london, uk