Entertainment UK (EUK), Woolworths CD and DVD distribution division, today made 700 staff redundant after failing to find a buyer for the business.

Deloitte, the accountancy firm working to save the high street retailer and its distribution division, admitted that it had been unable to find a buyer for EUK, and today's job losses add to the 450 staff already cut from Woolworths’ head office.

EUK will continue to operate with a reduced workforce of 375. Woolworths employs around 30,000 staff across the group.

Dan Butters, a partner at Deloitte, said: “Regrettably, despite our continued efforts, we have been unable to identify a suitable buyer for the business.

"Whilst we will continue to consider offers for the sale of the business as a going concern, we will now focus on realising value from the company’s assets.”

The collapse of Woolworths has had significant knock-on effects on other UK retailers, culminating in EUK being unable to deliver CDs and DVDs in time for the key Christmas trading period.

Zavvi, the music chain that previously traded as Virgin Megastores, was yesterday forced to tell customers on its web site: “We are currently experiencing supply problems and have temporarily suspended orders until the supply situation is resolved.”

The Times then revealed that Deloitte, acting for Woolworths and EUK, has drafted an emergency restructuring team from Ernst & Young, the accountancy firm, into Zavvi which owes EUK £106 million.

It is also understood that Tesco and J Sainsbury also owe the collapsed distributor about £25 million each.

Zavvi today denied that creditors had appointed Ernst & Young, stating: "Ernst & Young have been providing invaluable advice and expertise to the group over the past few weeks since Entertainment UK (zavvi’s main supplier) was placed in administration."

Commenting on EUK, Zavvi said it was "disappointed to hear that the administrators for the Woolworth Group PLC have been unable to find a buyer for Entertainment UK".

It added: "Our thoughts go out to all the employees at EUK who have been affected by today's decision."

Zavvi said it is dealing direct with suppliers to ensure products are arriving at its 125 stores in time for Christmas. It added: "Zavvi is currently reviewing its distribution strategy and will announce plans in the near future."

Deloitte said earlier this week it had failed to find a buyer for Woolworths’ 813 high street stores and launched a closing down sale which saw the retailer make sales of £20 million - its best day's trade in its 99-year history.

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