We can't really blame this one on the economy, and definitely not the state of record sales, but we can definitely blame it on corporate greed -- the Times Square Virgin Megastore will close its doors in April after months of speculation, allowing parent companies Related Cos. and Vornado to bring in higher rent profits from the space.
The Times Square Virgin location is the highest volume music store in the entire country, bringing in an estimated $55 milion in annual revenue and about a $6 million dollar total profit. But the store only pays $54 per square foot in rent when the market rent in the area is around $700 per square foot.
The store's closing has been in the rumor mills since August 2007 when the Virgin Entertainment Group North America was initially acquired by the Related Cos. and Vornado in a joint venture. As of last June, they were saying the store would definitely close in the first quarter of 2009, and now it is so. The companies plan to lease the space to Century 21.
This leaves New York's Union Square store as the lone soldier -- the location pulls in about $40 million in annual volume compared to the Times Square location's $55 million, but even its future isn't secure. Apparently the Related Cos. and Vornado leased the ground floor of the store to Nordstrom Rack for the holiday season. The deal fell through, but they're clearly not all that attached to the concept or confident in the brand.
VEG NA CEO Simon Wright says no decision has been made on the 14th Street store. While the closure of the Times Square store has wider implications for the chain's overall health, the owners and VEG NA management will assess what to do with the rest of the stores over the next few months.
So while we worry about the future of our neighborhood record stores, even corporate America doesn't seem to have any faith in a store that brings in millions annually from music and entertainment. We're keeping our fingers crossed for Union Square.