More VEG Stores For Sanity

Sanity, Australia's leading music retailer, is pressing ahead with a second phase of expansion into the U.K. after striking a deal last week to acquire 41 outlets from Virgin Entertainment Group (VEG). The U.K. stores, currently trading under the V Shop banner, are expected to be rebranded to Sanity in time for the peak Christmas trading period. Sanity last year bought 77 VEG U.K. outlets (Bulletin, Oct. 4, 2001).

Under the cut-price deal, which is expected to take effect after Nov. 1, Sanity will buy about £2.8 million ($4.33 million) worth of VEG's inventory at cost. Lease agreements for the 41 stores will be assigned to Sanity. No jobs are expected to be lost.

Andy Randall, managing director for VEG division Virgin Retail, says the pact follows the successful conversion of 18 V Shops to the new brand Virgin Megastore Xpress. Plans call for the rebranding of 37 other V Shops within the month. "We've been looking for an opportunity to possibly offload [remaining V Shops]," says Randall. "In a stroke, we get rid of stores that really wouldn't have really figured in our portfolio for years to come. We didn't see them as suitable for conversion."

Sanity Entertainment U.K. managing director Shane Fallscheer says about 15 of the VEG stores bought last year have been rebranded, with each showing sales up at least 10% from the year before. "All signs for the Sanity refits are very strong," he says.

Meanwhile, on the domestic front, Sanity parent Brazin says that its Australian business suffered comparable-store sales declines for the three months to September.