Woolworths sells loss-making music and DVD unit
Retailer Woolworths Plc said it had sold its specialist entertainment store chain, MVC, to a group of retail investors for £5.5 million. Analysts said the sale of the loss-making business removed a problem area for Woolworths although the price was...
Retailer Woolworths Plc said it had sold its specialist entertainment store chain, MVC, to a group of retail investors for £5.5 million. Analysts said the sale of the loss-making business removed a problem area for Woolworths although the price was below expectations following the withdrawal of two potential buyers.
The loss-making MVC music and DVD business, put up for sale in March, was bought by a group of investors led by Chris Steed, managing director of Argyll Partners.
The retailer said in a statement yesterday that the sale will result in an exceptional loss of about £34 million for the half year just ended.
"The price of £5.5 million is very disappointing, and reflects the fact that two buyers now had dropped out of the process. The book loss of 34 million is also heavier than we expected," RW Baird said in a research note.
However, brokerage Seymour Pierce told clients the sale was good news as it removed a millstone from Woolworths' neck.
Woolworths shares were up 1.4 per cent at 37 pence in a firmer broader market at 1000 GMT.
Woolworths closed the 14 worst performing MVC outlets in March, leaving 67 to sell.
The sale to Argyll followed the breakdown of attempts to sell the business to UK music retailer Music Zone as well as buyout firm Apax Partners' decision to drop an £837 million bid for the whole company in April, analysts said.