Post by Dave on Sept 29, 2008 13:14:43 GMT
Hello everyone,
I am posting today's article from Music Week for information only. As regular purchasers of CDs etc., I think we should all know about these problems caused by the credit crunch, whose tentacles seem to be spreading far beyond the financial World.
Note that the Woolworths subsidiary Entertainment UK (EUK) supplies several other major CD retailers too - and it will be interesting to see if any of them have CD stocking problems because of this.
(c) Music Week
Note that Woolworths group has not gone bust but it is having problems because of a poor credit rating.
Dave
I am posting today's article from Music Week for information only. As regular purchasers of CDs etc., I think we should all know about these problems caused by the credit crunch, whose tentacles seem to be spreading far beyond the financial World.
Note that the Woolworths subsidiary Entertainment UK (EUK) supplies several other major CD retailers too - and it will be interesting to see if any of them have CD stocking problems because of this.
Labels halt credit to ailing Woolies
09:16 Monday September 29, 2008
Woolworths’ woes send tremors throughout music retail as EUK is refused credit
The music industry is facing a potential crisis at retail heading into quarter four after labels last week refused credit to EUK because of fears about its owner Woolworths Group’s financial future.
Woolworths said in a statement, “While it is true that some credit insurers are tightening terms of trade, we are trading as normal with our suppliers and will continue to do so.”
However, Music Week understands most key suppliers last week took the step of putting the leading entertainment distributor on credit hold after they found they could no longer secure credit insurance for their supplies in case anything happened to the Woolworths Group. It is understood games and DVD suppliers have made the same decision.
As Music Week went to press, the situation meant that EUK was only able to get stock by paying upfront.
Given EUK is the UK’s main distributor of music product, with a range of clients that includes Zavvi, Asda, Sainsbury’s and the Woolworths chain itself, the turn of events is likely to have a significant effect on the music retail market just as the busiest three months of trading during the year begin.
“This is monumental what is happening,” says one record company source. “If you think who EUK supplies, there’s no product going out the door to them.”
The decision to put EUK on credit hold is understood to have happened at the beginning of last week after suppliers discovered they could no longer obtain credit insurance for their product. This meant they would have no protection for their supplies in the instance of the Woolworths Group’s financial situation worsening.
The source explains, “Nobody has been able to get credit insurance for EUK. Many thought they had 60 to 70% of their risk covered by the insurance companies, but the big change that happened last week was caused by two drivers: the financial crisis and Woolworths posting their worst ever trading figures – and these were the tipping points.”
Despite this, Woolworths said it is “comfortable with the financial and cash position of the group” adding, “We continue to work closely with suppliers and credit insurers in what is clearly a difficult environment for the retail and wholesale sectors.”
The statement concluded, “EUK continues to work closely with all of its customers and suppliers to ensure a successful Christmas period for all parties."
For full story, see this week's Music Week.
09:16 Monday September 29, 2008
Woolworths’ woes send tremors throughout music retail as EUK is refused credit
The music industry is facing a potential crisis at retail heading into quarter four after labels last week refused credit to EUK because of fears about its owner Woolworths Group’s financial future.
Woolworths said in a statement, “While it is true that some credit insurers are tightening terms of trade, we are trading as normal with our suppliers and will continue to do so.”
However, Music Week understands most key suppliers last week took the step of putting the leading entertainment distributor on credit hold after they found they could no longer secure credit insurance for their supplies in case anything happened to the Woolworths Group. It is understood games and DVD suppliers have made the same decision.
As Music Week went to press, the situation meant that EUK was only able to get stock by paying upfront.
Given EUK is the UK’s main distributor of music product, with a range of clients that includes Zavvi, Asda, Sainsbury’s and the Woolworths chain itself, the turn of events is likely to have a significant effect on the music retail market just as the busiest three months of trading during the year begin.
“This is monumental what is happening,” says one record company source. “If you think who EUK supplies, there’s no product going out the door to them.”
The decision to put EUK on credit hold is understood to have happened at the beginning of last week after suppliers discovered they could no longer obtain credit insurance for their product. This meant they would have no protection for their supplies in the instance of the Woolworths Group’s financial situation worsening.
The source explains, “Nobody has been able to get credit insurance for EUK. Many thought they had 60 to 70% of their risk covered by the insurance companies, but the big change that happened last week was caused by two drivers: the financial crisis and Woolworths posting their worst ever trading figures – and these were the tipping points.”
Despite this, Woolworths said it is “comfortable with the financial and cash position of the group” adding, “We continue to work closely with suppliers and credit insurers in what is clearly a difficult environment for the retail and wholesale sectors.”
The statement concluded, “EUK continues to work closely with all of its customers and suppliers to ensure a successful Christmas period for all parties."
For full story, see this week's Music Week.
(c) Music Week
Note that Woolworths group has not gone bust but it is having problems because of a poor credit rating.
Dave
