zavvi Enters Administration

Following problems stemming from the collapse of Woolworths and EUK, parts of the zavvi Group (which sells games, music and DVDs) have been put into administration. The move puts the jobs of some 2,363 permanent staff members and 1,052 temps at risk.

It's unclear whether the company will remain intact. Ernst & Young, the appointed administrator for zavvi UK and liquidator of zavvi Guernsey, has stated that it plans to keep zavvi trading while it looks to sell the group either in whole or in part. At this time, however, no formal insolvency proceedings have been initiated for Zavvi Ireland.

Tom Jack, joint administrator at Ernst & Young, said, "Since EUK went into Administration, and perhaps before, the impact of problems at EUK on the zavvi Group has been significant.

"Minimal deliveries, no returns and worse trading terms are just some of the areas impacted.

"In the absence of a buyer for EUK, and with dire trading conditions on the high street, the zavvi Group has seen a material fall in sales and the Directors have now been forced to place parts of the Group into Administration."

It's no secret that zavvi has suffered following the problems surrounding Woolworths and its supply company, EUK. The retailer was missing key stock for portions of the Christmas period and for a time was unable to honour sales through its website.

"The Administrators intend to continue to trade zavvi UK with a view to selling all or part of its business as a going concern", said Jack.

"We are grateful for the continued support of all employees during this difficult time and would like to thank everyone at zavvi for their commitment and hard work as the business continues to trade."

Simon Douglas and Steve Peckham, zavvi's founders, commented, "We would like to thank all of our employees for their commitment and support since the launch of zavvi. We have done all that is possible to keep the business trading, but the problems encountered with EUK, and particularly its recent failure, has been too much for the business to cope with."

While the future of zavvi is in severe doubt, stores will remain open for the time being, with the company planning to open on Boxing Day for sales.

While zavvi slipping into administration may mean good deals for the consumer in the short term, these will be lost in the general hubbub of the January sales. In the longer term, the loss of a major games retailer will result in less competition on the high street which cannot be good for gamers.

Looking more broadly, many will take this as another sign of how troubled the economy really is. If a buyer cannot be found for zavvi, this will dent confidence and add to the jobless figures, when what the economy needs right now is a little positivity. While no-one denies that times are tough at retail, zavvi's fate was sealed by the failure of EUK/Woolworths and without that event, it is likely that the company could have traded through the downturn.

^{Sources:
Metro
ThisIsNottingham}