Richard Branson and his Virgin Entertainment Group has sold the last of the North American Virgin Megastores music stores to real estate development firm "Related Companies" and "Vornado Realty Trust." There were 11 remaining U.S. stores involved in the deal. The deal is scheduled to be closed in September.
"With most of our global retail operations now franchised, Virgin Group will continue to focus on being a global leader in transportation and renewable energy, with interests in financial services, communications and media, health and leisure," Virgin Group Founder and Chairman Richard Branson said in a statement.
After divesting of the rest of the U.S. stores, Virgin Megastores has had growth in 2007 with "a 10% increase in comparable music sales through fourth period, and a 17% increase in overall comp sales over last year."
Other categories that have been strong over the period have been DVD sales, interactive games, electronics and fashion.
Sources close to the situation say Vornado put up over 50 percent of the money for the purchase, while Related will own 51 percent of the company to Vornado's 49 percent.While Related says it will continue to invest in the stores, industry watchers say they expect the two stores in Times Square and Union Square to be shut down as Virgin had leases for $100 a foot, where market rates in the areas are $800 a foot. They could make 8 times the money by shutting them down, probably a big reason the real estate companies were interested.
Comment Preview