Virgin flog successful Stateside Megastores
Words Luke Turner
The Virgin group has sold off its 11 US stores to property developers Related, including its flagship outlet in New York’s Times Square. The sale comes on the back of Virgin Megastores increasing their sales growth by five per cent, contrary to the current gloomy state of the music retail business.
Full details of the deal will be revealed in October, but it is thought Related will gain a 20-year licensing deal to use the Virgin Megastore brand and possibly open new stores across the US. The agreement will see Virgin Entertainment CEO Simon Wright moving to Related to ensure a smooth transition and build on the recent positive sales figures. Wright said he felt the Richard Branson-owned Virgin group “wasn’t going to invest enough” in the chain of stores. By contrast, it is thought that Related are looking to plough $50 million into the US Megastore branches. Branson himself outlined the shift in focus for Virgin, saying that the business would increasingly franchise out many operations in order to concentrate on its core strategy. “Virgin Group will continue to focus on being a global leader in transportation and renewable energy,” Branson said.
As the landlord of the New York Megastore, Related will have a vested interest in ensuring that the shops build on their current growth. “We’ve got a very high-quality owner,” said Wright. “I looked around at businesses that they’ve invested in and got very good feedback.”
The only Virgin Megastores still under the ownership of the Virgin group are now the 65 outlets in the UK, with some industry insiders speculating that they too could soon be sold by Virgin to an outside party.
