Oh, Monseur le Fopp, you are really spoiling us...

It's over for FOPP, I am told.

well thats it for bristol then.
nothing left now that all the indies were run out of town.
just crappy HMV (for a few more months) and Virgin.
oh and Woolies of course.

The 184,000 profit on 40 mill turnover posted upthread I can believe -- the Fopp business model has presumably always operated on low margins, and obviously the only way to grow a business like that is to take a little bit of money in a lot of places, hence I can see why expansion might be attractive, esp. if you thought you would be dancing on the grave of HMV / Virgin. But can't see this business being attractive to anyone else, particularly.

Maybe successful stores will continue if chain is broken up?

swallowing the higher than expected debt of MVC (£20million+ according to one person in the know) was the killer.
sounds like someone did some clever accouting during the MVC deal and now Fopp (and its staff of course) are paying the price.

So, what do we do now?

Returning to the original 'question', are we spoilt now? Heck, I did wait for those Nick Drake 'new' cds to come out at a cheap price. In truth, I was even planning to wait for the new 'family tree' to do the same. But, what do we do now? Stump up? Or end up saying "Actually, I didn't really need it anyway" and go along not thinking about it, like Baloo says.

So, I have a reasonably decent backlog of stuff I haven't quite played enough, some not played at all yet.

For opening up and bucking the trend of selling CDs cheaply without selling pure quizi-hallmark crapola, against the trend of 'all sales to centre on downloads', we thank ye.

So, are they open today or not? And does us circling like hawks waiting for panic sales help or hinder their cause?

Should think they'll be shut. If you worked there and found out you weren't gonna get paid, would you turn up for work?

If I was in charge of marking down sale stock, which I could then purchase with a staff discount, yes.

pour out a 40

which I could then purchase with a staff discount, yes

Fuck the purchase option, if I was losing a months wages I'd be taking my wages in box sets and dvds.

exactly. staff discount LOL.

(too honest for own good)

But anyway, if you can mark down a box set to £2, why not?

This is all a bit unworthy. I hope the administrators can keep at least some stores going.

This all makes me want to open a record store, strangely. How hard can it be? Finsbury Park needs one!

This all makes me want to open a record store, strangely. How hard can it be? Finsbury Park needs one!

Indeed it does! You know the hairdresser (or is it a minicab office now - i left FP 9 months ago and my memory is fading) at the bottom of Stroud Green Road, just before the bridge by the tube - the one that looks like its in a garden shed? A secton of that used to be record shop! A tiny one selling reggae and a bit of hip ho - closed about 3 years ago. Considering the large AfroCaribbean community, I'm suprised that didn't survive.

Yeah I know where you mean. I never went in, though.

also Fopp opened a new Fopp store in Cumbernauld earlier this month.

Opening a record shop in Cumbernod? No wonder they've went out of business!

Did they get John Gordon Sinclair and Clare Grogan to open it?

just got this press release:

'It is with great regret that we announce the closure of Fopp.

Our store chain is profitable, well regarded and loved by our loyal customers and staff. However we have failed to gain the necessary support from major stakeholders, suppliers and their credit insurers to generate sufficient working capital to run our expanding business.

We would like to thank staff and customers for their support over the past 25 years'

ENDS

A fopp spokesperson

It's the Day the Music Died

I'm actually quite stoked about this.

What, about several hundred people losing their jobs? Not a cause for celebration, surely...

As it was the only shop (about from...cough...IKEA) that I couldn't leave without having purchased several items I'm annoyed that they seemed to have cocked it up with the purchase of MVC/whatever the hell it was called. Godammit I HATE going in HMV or Virgin.

xpost. Well it would have been less people if they hadn't decided to go on an expansion rampage while their business was already failing, opening shops all over the shop while their existing ones weren't even viable.

That's not those staff members' fault though, is it?

xpost. Well it would have been less people if they hadn't decided to go on an expansion rampage while their business was already failing, opening shops all over the shop while their existing ones weren't even viable.

-- jim, Friday, June 29, 2007 6:43 PM (2 minutes ago) Bookmark Link

fewer. why are you 'stoked' though? you were personally offended by fopp's expansion?

"Disaster for Scotland!"*

(obscure 70's football references-R-us)

xpost. Aye.

Profitable - yes. But at 4.6% of revenue, no-one would be interested in putting money into this as an investment.

They could of course get VC and change strategy, but they would need to avoid a strategy that brings them into direct conflict with HMV. They'll lose that battle.

Everyone I know who uses Fopp pretty much only buys cheapo items - they would need to find a way to subsidise that by selling more close-to-full-price product. Their marketing strategy was pretty naive - you can use the bargain basement strategy to gain share, but pretty soon you need to change tack to start making some money. They never got to the making money stage, yet foolishly expanded at a rate that their cash flow couldn't support.

Their stores were laid out pretty badly (for them) - lots of cheap CDs near the door and on big displays, but few incentives to buy more expensive items i.e buy this CD for £10 and get another for £4.

They never got to the making money stage, yet foolishly expanded at a rate that their cash flow couldn't support.

I'm sure the first few stores made money.

They did perfectly well for 15-20 years or so

Sad to think that there were four record shops in Byres Road and now there's only Lost in Music left.

Making enough money (to expand as they wanted).

Yes, they did well until they tried to expand too fast. One bad decision.

employees not paid this month = sadface

That's exactly what I said exactly one week ago! (xp)

I would have thought that there is no way out of this, unless they can sell off a lot of newly acquired stores and some of the least successful old stores. They would have to then start again with a core of stores and a new strategy. I'd say it's viable, but of marginal interest to investors.

if their store chains are "profitable" then not paying their employees for a month of work is surely against the law?!!

i mean i don't know how bankruptcy works in the UK, but if you're "profitable" in the US, you don't get to do the whole "here's a briefcase full of money, representing a penny for each pound i owe you - take it or leave it" gambit

They owe the employees and they owe the bank. Usually the bank wins.

employees not paid this month = sadface

That really sucks. Especially because they must have seen this coming.

if they owe both employees and the bank then they are operating under a very different definition of "profitable" than the one most people i know are familiar with

That "profitable" was for 2006. 2007 has seen stupid expansion, no cashflow, no stock replenishment, closed shops and no business. I don't think their balance sheet will lack red numbers for 07.

so what they meant was "our stores WERE profitable". i guess it was just an honest verb tense mixup.

Thing is: Record shops are in a constant state of 'debit', are they not?

That said, you can carry debt and be a "profitable" business as long as you're servicing said debt with agreed payments.

re: if their store chains are "profitable" then not paying their employees for a month of work is surely against the law?!!

The Fopp shops were profitable pre the acquisition of 67 stores from Music Zone, and since then (February 2007) they have closed over half of these !

More from The Times

Fopp confirms closure of all music stores
http://tinyurl.com/364g58

Other sources questioned whether the chain was profitable and it is thought it may have over-reached itself with the acquisition of 68 Music Zone stores from the administrator in February.

Of those stores it bought it later had to shut some 37 and now has around 81 stores in total.

With the debt of acquiring the Music Zone stores, plus the costs and loss of turnover of closing over half of these post acquisition - has hemorrhaged cash from the business.

In acquiring Music Zone stores from the administrators Deloitte, - Fopp obviously didn't probably analyse the implications of how many stores they could afford to take on. The additional costs of conversion, the financing of the debt, turnover in a difficult retail trading conditions, the working capital required to keep the business going.

They acquired too many stores and just didn't have the finance to continue.

How much did they pay to acquire the Music Zone shops?

Apparently this was financed by short term floating debt, with high interest rates

Why weren't the legal implications of Music Zone stock sorted with lawyers and accountants before they agreed to take over the Music Zone stores?

I am glad I got rid of those vouchers, yet slightly annoyed that they seemed to have put big "vouchers available" signs up in every aisle this week.

I will miss them, and I will miss this thread.

I reckon, "suck it and see" must have been pretty dire for profits, much as I loved it myself.

Would another retailer buy the Fopp chain / brand?

Tesco: Are always looking to expand

WHsmith: Once owned Our Price.

Woolworths: would they buy the Fopp Brand for a knock down price and once again enter the specialist music chain business.

Sir Alan Sugar

if they owe both employees and the bank then they are operating under a very different definition of "profitable" than the one most people i know are familiar with

Onimo is right. Many companies run with high levels of debt at the same time as being profitable. It's not realistic to fund operations with cash. But if they get to a situation when investors not only don't see a positive return in the medium term, but think they may actally lose money, with no prospect of ever getting it back, they'll cut and run.

Funny, I had to rescue this thread from "unanswered questions" before it managed to get going...