Sir Richard Branson's Virgin Megastore chain, weighed down by competition from supermarkets, made losses of nearly £70m in the year to March 2004, according to the latest company accounts.
Virgin Retail, the parent company for the megastore chain, made a loss of £68.2m on a turnover of £376m for the 60 weeks to 27 March 2004. For the previous accounting period, of 52 weeks to February 1 2003, the group lost £6.6m on turnover of £353m. The figures included an operating loss of £38.4m, which the company blamed on competition from supermarkets in music and DVD sales.
"The group encountered a difficult trading environment, with significant price competition being experienced, in particular from supermarkets, that affected sales and margins in both chart and campaign products," the accounts said.
The company is unlikely to return to profit until the 2005-6 financial year, John Jackson, the chairman of Virgin Retail, said yesterday. "It has been a pretty tough environment and everyone knows how tough it is. But we are more or less moving the business into profit for this financial year," he added.
The company is going through a reorganisation, which contributed £27.1m in exceptional expenses on top of the operating loss. Up to 50 of Virgin's smallest stores have been either sold or closed. Remaining stores are being refurbished, and some are being relocated. Mr Jackson said: "We have churned a lot of property in terms of getting to a better pitch on the high street."
Virgin is now carrying a broader range of titles beyond the popular chart albums where competition was fiercest. And this year the company will launch a UK version of its Virgin Digital music download service to rival Apple's iTunes. It has also recruited new management: the trading director Marc Noonan, from HMV, and Currys' Richard Carter is the operations director.
Mr Jackson ruled out a stock-market launch in the wake of the successful flotation of Virgin Mobile in the UK.