June 25, 2007

By By Juliana Koranteng, London

The fate of leading U.K. independent music retailer Fopp remains uncertain despite stores re-opening on June 23, after an unexpected closure the day before.

The company has publicly admitted "experiencing difficulties" after failing to open its chain of nearly 50 stores on June 22 -- a closure that was blamed on annual stock-taking. A few days before that, Fopp had also asked book publishers to halt their supplies.

Fopp has also stopped taking orders via its Web site, is only accepting cash payments within its shops, and has not received this week's new music releases.

On the Web site is the following statement: "Due to circumstances beyond our control, we cannot currently take orders online. Sorry for any inconvenience caused."

When Billboard.biz visited one of its London outlets, it found that Fopp has posted statements on its cashier tills saying it cannot process credit card payments for the foreseeable future. It blamed its problems on the "failure of its authorization systems."

Billboard.biz asked Fopp's spokespersons to explain the latest developments, but no one had returned comment by close of business.

Earlier, a Fopp spokesperson had responded to rumors that the group was about to go into administration (similar to Chapter 11 Protection) with the following statement:

"Fopp continues genuine and lengthy negotiations with its bank, and is not in administration. Stock-taking is now complete, stores re-opened on Saturday (June 23) and will continue to remain open."

But, until the outcome of the talks with the chain's bank (the Bank of Scotland) is disclosed, the retailer's future remains up in the air.

Fopp astonished the industry with its rapid rise from a market stall in the 1980s in Glasgow, Scotland, to becoming the country's third largest specialist bricks-and-mortar music seller after HMV and Virgin Megastore.

It appeared to have found a winning formula with its stripped down pricing policy -- including prices ranging from ?8 ($16) to ?12 ($24) for new releases.

Today, Fopp comprises 47 stores, with the latest outlet opened earlier this month in Cumbernauld, the 11th Fopp store in its native Scotland.

It also recently acquired the bankrupt Music Zone chain and its 67 stores (Billboard.biz, Feb. 05, 2007).

The costs of incorporating the 67 new outlets, the recent rise in loan interest rates, plus the slowdown in music sales are said by industry experts to have created more difficulties than anticipated.

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