The six remaining Virgin Megastores in the United States are set to close after nearly two decades of operation, dealing another blow to the sales of traditional music formats.
Virgin Entertainment, which owns the stores, says the decision to shut the stores was made in the light of a new real estate deal, which will see the property charge higher rents for new tenants.
The company will cease operations at its San Francisco, Denver, Orlando, Hollywood and both New York locations – including the famous Times Square location. Virgin’s remaining 150 megastores around the world will remain open.
Existing stores will remain under the “Virgin” brand, developed by billionaire Richard Branson. He is not a shareholder in the business. A joint venture between Related Companies and Vornado Realty Trust purchased the US chain in 2007 and formed Virgin Entertainment.
Get business news first
Sign up to SmartCompany’s daily newsletter
“It’s sad news, but it has nothing to do with the stores. In this economy, we can’t justify the other stores to replace the Times Square store,” Virgin Entertainment chief executive Steven Wright told TheWrap.com.
The company will slash over 1000 workers in both retail and corporate divisions. But Wright is hesitant to label the move as an injury of the downturn.
“I’ve been pushing back a little bit on the notion that this is just another casualty of the music industry,” he said. “Our six best stores from a retail point of view are also our six best stores from a real estate point of view.”
The chain originally sold just music products, but has expanded its product range to clothing, books and electronics in the last few years to combat declines in revenue.
Sales of CDs have been hit hard by the digital music revolution, with Apple’s iTunes store take the position of biggest music seller in the US.
- Richard Branson back in charge at Virgin Blue
- Richard Branson’s Virgin Group to launch gym business in Australia