The planned closures of the Virgin Megastores in Times Square and Union Square in New York City and the Market Street store in San Francisco are the beginning of the final wind-down of Virgin Entertainment Group North America.
Over the next few months, the company also plans to shutter its other three stores in Orlando, Fla., Denver and Los Angeles, with the company expected to liquidate sometime this summer.
Virgin Entertainment Group North America has been a question mark since August 2007, when it was acquired by two real estate companies: the Related Cos. and Vornado. The former controls the Union Square real estate where Virgin and Circuit City are now running going-out-of-business sales, while the latter owns the real estate for the Times Square store. Upon that acquisition, there was immediate speculation that the two companies bought Virgin for its New York real estate.
While it now looks like Virgin was always destined to lose its Times Square space–Virgin pays $54 a square foot in rent there, according to press reports, while the market price for that location currently is in the $400-$500 per-square-foot range, according to Prudential Douglas Elliman Real Estate Chairman Faith Hope Consolo–the company still had a chance to continue, Virgin Entertainment Group North America CEO Simon Wright says.
For a while there was talk of moving Virgin to the empty space next door where Barcode closed down years ago—until the economy went south. VEGNA had successfully re-merchandised its Times Square store into a lifestyle experience where clothing and portable electronics were more of a factor in the store’s profitability, while using music as a draw-in factor.
But the company was also working on improving its concept for a smaller space. With CD sales sliding, “I tried my hardest to come up with a new model, and we were making a lot of headway with it before the holidays,” says Wright. But, the “economy is so bad; it’s all about batten down the hatches.”
In this case, that means the total shutdown of Virgin stores. That leaves J&R Music World as the last music superstore in New York City.