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Virgin Megastore to shut doors

With CD sales sliding, the Sunset Strip shop had diversified beyond music, but the rent was too stiff, the firm says.

December 27, 2007|Alana Semuels | Times Staff Writer

Another one bites the dust. The Virgin Megastore on Sunset Boulevard in West Hollywood, just down the street from the shuttered Tower Records, will close when its lease is up in January.

The rent is simply too high, Simon Wright, chief executive of Virgin Megastores North America, said Wednesday.

"We're trying to reposition the business," Wright said, "and a lot of our stores are too big for the future, primarily due to the drop in music sales."

The chain -- which Related Cos., a New York-based real estate company, purchased in September for an undisclosed amount from Virgin Entertainment Group -- has been turning its focus away from CDs and stocking more clothing, games, pop-culture knickknacks and books.

It has also been downsizing, closing stores in Chicago and Salt Lake City this summer. After January, there will be 10 Virgin Megastores in the U.S., four of them in California, including one on Hollywood Boulevard that opened two years ago.

"It's a challenging time," said Geoff Mayfield, a senior analyst at Billboard magazine.

Sales of compact discs were down 23% last week from the same period in 2006, Billboard reported, as people continue to turn to the Internet for music. Meanwhile, Best Buy Co., Wal-Mart Stores Inc. and other retailers account for at least half of album sales, Mayfield said.

The trend felled Tower Records in 2006. Other local music stores that have shut down include Strawberries and Musicland. Nationwide, about 2,700 music retailers have closed since the beginning of 2003, according to the Almighty Institute of Music Retail. In Los Angeles, the number of pure-play record stores has dropped by half since 2003 to about 140.

At Virgin Megastores, music sales account for 40% of revenue today, Wright said, compared with 70% four years ago. December same-store sales were up 5% from last year, and Wright said same-store sales for the year would rise 13.5%.

"We're really turning the Megastores into lifestyle stores," he said. "We don't want to have to rely on music for future survival."

Amoeba Records, with locations in Hollywood, San Francisco and Berkeley, tells a contrasting story. Amoeba has a broad selection of music, sells used discs and is a young company with good prospects, Mayfield said.

For music lovers, Amoeba will be one of the few places to shop in the neighborhood after the Virgin Megastore closes, said Justin Goldberg, founder and CEO of online music network Indie911, whose offices are a few blocks from the Sunset store.

"It's a real loss for the community of people who really know their stuff about music," Goldberg said, adding that he did most of his holiday shopping at the Virgin Megastore in New York, where he bought books, CDs and DVDs. He shops at the Sunset store for box sets of music, complete with liner notes and photos, that are difficult to get online.On the website Yelp, where people review vendors in their communities, Andrew Sevrin, who works with the Los Angeles County Board of Supervisors, recommends the Sunset store for books and DVDs. "It's a shame they're closing," he said.

Sevrin and Goldberg said they didn't see the Virgin Megastore near Grauman's Chinese Theatre as a good alternative to the one less than two miles away on Sunset.

"It's so inconvenient with parking and everything," Goldberg said. "It's really more of a tourist trap."

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alana.semuels@latimes.com

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