Downloads slam Virgin France

Virgin Megastore’s French operation is declaring itself insolvent. The books-to-music retailer, which employs 1,000 people, is the latest victim of an industry-wide slump in CD and DVD sales as people increasingly download films and music online. Virgin Megastore France, which is no longer owned by founder Richard Branson, has not made a profit in four years and has debt estimated at 22 million euros. Filing to suspend payments is the first step towards a court-ordered company restructuring in France. Virgin France is not the only music retailer suffering from the industry slump. Its chief domestic rival, Fnac, is being spun off by parent group PPR and has sold its Italian businesses. In Britain, HMV last month said that it had “12 critical days” to pull in Christmas sales and help to avoid a likely breach of its banking agreements at the end of January. Virgin France is currently owned by private equity firm Butler Capital Partners, which bought a majority stake in 2007 from French media-to-aerospace group Lagardere, which had bought the chain from Branson in 2001. The group, which operates 26 Virgin-branded stores in France, including a flagship operation on the Champs-Elysees in Paris, generates sales of nearly 300 million euros. High rental costs in high-profile locations in city centres and falling CD and DVD sales amid competition from rising film and music downloads, as well as a recent drop in book sales, were mostly to blame for the group’s financial problems, a spokeswoman said.