to be updated . please update this article to reflect recent events or newly available information . march 2014 zavvi type private industry entertainment retail predecessor virgin megastores successor zavvi.com founded september 2007 2007 09 founder simon douglas headquarters london united kingdom number of locations 130 at peak 1 area served uk and ireland key people simon douglas chief executive officer steve peckham chief finance officer mark noonan commercial director 2 products books consoles bd dvd games t shirts revenue 441.4 million 2008 3 operating income 108.8 million 2008 3 profit 55.4 million 2008 3 number of employees 3 415 2008 4 parent zavvi entertainment group divisions zavvi group limited zavvi limited zavvi retail limited v space limited vshop retail services limited piccadilly entertainment store limited vr services limited vretail services limited ablegrand limited ablegrand 2 limited zavvi online guernsey limited zavvi entertainment ireland limited zavvi retail ireland limited zavvi ireland limited harlandic limited website www.zavvi.com zavvi was an entertainment retail chain in the united kingdom and ireland originally virgin megastores . zavvi was formed in september 2007 when a management buy out team purchased the company from richard branson s virgin group . it was the uk s largest independent entertainment retailer before being placed in administration on 24 december 2008 . 4 store closures took place from january 2009 with the last to cease trading on 20 february . hmv purchased 19 zavvi stores to be merged into the hmv chain . former managing director simon douglas and business partner les whitfield purchased five of the stores to form head entertainment 5 all of which eventually closed in early 2009 after less than a year of trading . 6 on 2 march 2009 the hut group purchased the rights to the zavvi brand online and relaunched the zavvi website with an increased range . 7 contents 1 history 1.1 virgin era 1.2 zavvi era 1.2.1 entertainment uk 1.2.2 administration 1.2.3 giftcards during administration 1.2.4 suitors 1.2.5 branch closures 1.2.6 impact of administration 2 corporate identity 3 retail acclaim 4 merchandising 5 product range 6 technology 7 retail website 8 stores 9 references 10 external links history edit virgin era edit main article virgin megastores richard branson started his first virgin store on london s oxford street in 1971 . in 1979 the company opened its first megastore at the end of oxford street and tottenham court road . throughout the 1980s and 1990s the chain grew most notably through its merger with the our price chain whilst under the ownership of wh smith . virgin megastores had become an international franchise as part of the virgin group but during the early to mid 2000s the virgin group decided to sell off most of its virgin megastores to various companies including the french stores to the lagardere group and the american stores to related companies . zavvi era edit zavvi northumberland street newcastle upon tyne . this store closed on 29 january 2009 on 17 september 2007 it was announced that the uk arm of the virgin megastores brand was to break away from the virgin group . 8 a management buy out offer was led by managing director simon douglas and finance director steve peckham for an undisclosed sum though reportedly 1 . 9 10 as a result zavvi became the largest independent entertainment retailer in the uk . euk the company s main stock supplier 11 also the supplier to chains including woolworths and sainsburys was not involved with the management buy out but invested financially to support the new management team as well as employing most of the ex virgin buying team . after the change of ownership all 125 stores traded under the zavvi brand rather than as virgin megastores and virgin xs stores . some stores retained an individual virgin media concession that operated independently from the zavvi store . zavvi ireland had made a loss of 3.4 million in the year ending march 2007 as the new chain attempted to turn a profit without the backing of the virgin group . 12 on 21 september 2007 simon douglas announced that zavvi would be making a fresh start in the entertainment retail space . this included the plans to focus more on the sale of games to compete with game and gamestation . 13 douglas also stated that the company s in store games department was to expand by 15 % due to its success over the 2007 christmas trading period . 14 two days later plans were revealed that zavvi would differentiate itself from its competitors with limited editions and exclusive products in addition to increasing the stores online market share during the next year . 15 following a trial period it was announced on 28 march 2008 that all zavvi stores would feature a book department . 16 in july 2008 near to the first anniversary of the zavvi entertainment group it was announced that the entertainment retailer was to partner with the charity youth music who would be hosting in store events band nights sponsorship busking and music quizzes to raise money for the organisation along with installing collection boxes across its stores . 17 in november 2007 the scottish pop band wet wet wet were the first band to play two gigs at zavvi stores in glasgow and london . 18 on 9 january 2008 simon douglas released a statement claiming a 10.8 % increase in sales on the previous year for the four week trading period ending 5 january . 19 as a result the company featured in grant thornton s top five performers for the christmas trading period of 2007 . 20 entertainment uk edit on 5 december 2008 the daily telegraph reported that zavvi was seeking help from the virgin group to guarantee millions of pounds worth of its stock payments to woolworths entertainment uk euk as euk had entered into administration . 21 on 12 december the times reported that ernst & young may step in if zavvi could not pay euk the value of the stock which amounted to a 106 million debt . 22 later that day a spokesperson from zavvi clarified this position by stating that they had called in ernst & young in an advisory capacity . they were not as the times reported called in by anyone to take the company into administration . zavvi was forced to shut down its internet operations as it entered talks with euk and deloitte & touche euk s administrators . 23 nick fox a spokesman for virgin said that a deal had been done with the administrators of woolworths who accepted 40 million to settle the debt . 10 zavvi had been trading well prior to the collapse of woolworths in november . 10 zavvi was left without stock of some of the main christmas best sellers and had to obtain the products from other sources paying cash up front . 24 on 8 december 2008 zavvi suspended its sale of gift cards citing the problems with its supplier euk as the cause . 25 administration edit the zavvi group of companies hierarchical structure february 2009 . on christmas eve 24 december 2008 the zavvi uk group went into administration owing to the loss of its supplier as the company was unable to source stock in its usual way . 26 27 zavvi had attempted to buy supplies from alternative suppliers but experienced difficulties in obtaining stock on favourable credit terms or acceptable prices . as a result this placed pressure on the company s working capital and when quarterly rents were due approximately 13 million on 25 december 2008 the directors were unable to meet their creditor liabilities . 28 simon douglas the founder of the entertainment retailer stated we have done all that is possible to keep the business trading but the problems encountered with euk and particularly its recent failure have been too much for the business to cope with . 29 the companies within zavvi uk which entered administration were zavvi group limited zavvi retail limited piccadilly entertainment stores limited vr service limited ablegrand limited and ablegrand 2 limited . tom jack simon allport and alan hudson of ernst & young llp were appointed joint administrators and zavvi continued to trade as the administrator sought a buyer . ernst & young said zavvi guernsey would be liquidated while zavvi ireland was not at the time subject to any formal insolvency proceedings . at the time of administration zavvi had 114 stores in the uk and 11 in ireland employing 2 363 permanent staff and 1 052 temporary staff . 30 all stores opened as normal on boxing day st stephen s day 26 december for the normal post christmas sale . 31 on 30 december zavvi ireland entered provisional liquidation with david m. hughes of ernst & young and officially entered liquidation on 19 january 2009 at a hearing of the high court in dublin . 32 on 13 january zavvi entertainment group limited entered administration . a meeting of creditors was held at the excel exhibition centre london on 16 march 2009 . 3 giftcards during administration edit a trust fund was formed on 27 november 2008 when euk went into administration which safeguarded the money used to purchase gift cards . however customers who purchased a gift card prior to this date could write to the joint administrators and ask for the debt to be registered as an unsecured claim . 26 33 the joint administrators refused to redeem vouchers acquired prior to 27 november 2008 with two reasons for their decision . 3 firstly zavvi did not own the stock in their stores . prior to the administration if customers redeemed their vouchers in zavvi stores zavvi would pay the owner of the stock the retail sale price of the goods . in the normal course of the business if a company is able to pay all its debts as they fall due this is not a problem . at the date of the administration zavvi was insolvent and there were approximately 510 000 vouchers with a total value of around 4.1 million which had yet to be redeemed . if the administrators allowed vouchers to be redeemed against stock they would have had to make payments to the owner of the stock without receiving any monies from the sale of the stock . the joint administrators believed this would have been to the detriment of other unsecured creditors of zavvi retail limited . secondly the administrators stated that they have a duty to act in the interest of all creditors to realise assets and distribute funds according to statutory legal priorities as set out by the insolvency act . they are not able to prefer one creditor over another . consequently it was not possible to use monies realised from commission on the sale of stocks or from the realisation of zavvi s assets to repay the voucher unsecured creditors ahead of other unsecured creditors . 3 if any money is left over once the administration process comes to a close and once those with secured claims such as the euk have been paid it may be possible that those customers will receive a refund . 34 the administrators intend to respond to all registered claims with a verified claim status by 28 march . unlike zavvi retail stores in the uk mr doherty counsel for zavvi said that vouchers which had been bought since 27 november could be redeemed for cash in any zavvi retail store in ireland . 35 as of 20 february 2009 the joint administrators estimated that approximately 32 000 vouchers had been received in support of claims at a rate of 100 to 200 claims to day . the average outstanding value of a voucher was 8.12 whilst vouchers purchased since 27 november 2008 had an average value of 15.83 . the total value of vouchers sold since 27 november 2008