Zavvi joins the casualty list

Retailer Zavvi (formerly Virgin Megstores) finally went into administration yesterday afternoon after prolonged speculation that it was in financial difficults.  The statement made on Zavvi’s website says much about the reasons why this business failed.  This is a good example to use for centres preparing for the new AQA AS Unit 2 (working with suppliers, managing cash flow etc)

On 27 November 2008 Entertainment UK Limited (EUK), the Zavvi UK’s main supplier, went into Administration.  Since this time, the Group has been unable to source stock in the usual way and has been forced to enter into new trading arrangements.  The Directors understand it is unlikely that EUK will be sold as a going concern and the Group has continued to experience significant difficulty in obtaining stock on favourable credit terms. In addition, the Group has recently experienced a material fall in revenues due to the abrupt downturn in consumer spending. As a result of the above factors the Group began to experience significant cash flow pressure and ultimately became unable to pay its debts as they fell due.

More available here from the BBC web site and also from the Guardian

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