Virgin Group is the latest company to become embroiled in the collapse of high street retailer Woolworths. It is facing up to £100m in liabilities as it steps in to support Zavvi, the chain that was previously Virgin Megastores.
Zavvi, which was sold by Virgin to a management buyout a year ago, has been without key Christmas stock from Woolworths’ DVD and music wholesale arm due to the retailer’s collapse. It has been forced to pay upfront for stock from other suppliers to meet customer demand.
Virgin has stepped in with both cash and management advice as under the terms of last year’s deal, it guarantees Zavvi’s payments to suppliers for stock. It is understood to owe the high street retailer between £50m and £100m, but it is thought that it would look to pay with revenue from products sold in the run-up to Christmas.
Deloitte, the administrator to Woolworths, is still seeking a buyer for the core business, although this is not looking likely. Yesterday (December 4), entrepreneur and Dragon’s Den star Theo Paphitis pulled out of the running.