Page last updated at 13:17 GMT, Wednesday, 14 January 2009

Virgin's US flagship store shuts

Virgin Megastore in Times Square, New York
Virgin has been in Times Square for more than a decade

The biggest record shop in New York, the Virgin Megastore in Times Square, is to close in April.

The 75,000 sq ft store, which opened in 1996, is one of six currently operating under the Virgin name in the US.

However, its fate has been uncertain since Virgin boss Sir Richard Branson sold his North American entertainment arm in August 2007.

Virgin's other New York branch, in Union Square, is unaffected by the closure move.

Higher rent

According to US music trade magazine Billboard, the store is being closed because its current owners, property firms Related and Vornado, can lease the space more profitably to another tenant.

The two firms acquired the Virgin Entertainment Group North America in a joint venture 18 months ago.

Billboard quoted a Vornado executive as saying that Virgin paid just $54 per sq ft in rent for the location, whereas the market rent in the area was about $700.

Virgin has been the only major music chain in New York since 2006, when Tower Records went into liquidation. HMV pulled out of the US market in 2004.

Record shops of all kinds have been hard hit worldwide by declining sales of CDs and the rise of digital downloads.

However, the Virgin Times Square store makes an annual profit of $6m on sales of $55m, according to sources quoted by Billboard, making it the highest-volume music store in the US.

Virgin sell-off

Although the Virgin brand appears on storefronts around the world, none of them are now owned by Sir Richard Branson's Virgin Group.

Most of Virgin's music stores internationally are run by the French-based Lagardere Group, which acquired them in 2001.

In the UK, Virgin's shops were rebranded as Zavvi following a management buy-out in September 2007. The chain went into administration last month following the collapse of its main supplier, Entertainment UK.

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